The world is running out of onions

Sascha: [00:00:00] From Equity Mates media. This is The Dive. I'm your host, Sascha Kelly. When I think about the recipes I have on rotation, mince risotto pasta. The humble onion is often part of the ingredient list. And aside from risking lots of tears sobbing into the pan as I cut them, it's not something I think twice about. Onions have always been cheap and easily available, and it's a global appreciation. Onions of the staple of cuisines across the world. The most consumed vegetable after tomatoes. In fact, if you put all the carrots, turnips, chillies, garlic and peppers that the world produces in an incredibly large pot, it's actually the equivalent of just how many onions are produced. It's about 106 million metric tonnes. But now the two most consumed vegetables in the world are becoming really hard to come by. They're facing severe shortages and it's affecting many millions of people around the world. 

Audio Clip: [00:00:59] Modern supermarkets have it all, that is until they don't. Across the country, fruit and veg aisles are increasingly bare. 

Sascha: [00:01:07] Is this stage over? Food shortages were a big story in 2022. We talked about lettuce in Australia, rice in India, and cooking oil in the United Kingdom. And now we're just three months into 2023 and the conversation isn't stopping at onions. It's Friday, the start of March. And today I want to know why we are seeing more food shortages and should we expect more of them going forward? To talk about this today, I'm joined by my colleague and the co-founder of Equity Mates. It's Alec Renehan. Alec, welcome to The Dive. 

Alec: [00:01:38] Hi, Sascha. Good to be here. One gripe to pick up with the intro. You said that tomatoes are the world's most consumed vegetable. Up until a couple of weeks ago, I would have said tomatoes are actually a fruit. But I've actually been told recently, Do your own research on this. Apparently, tomatoes aren't a fruit. Apparently they're a herb. 

Sascha: [00:01:58] What is the difference between a fruit and herb and why sidetracking us instantly by now making that what the episode's about? 

Alec: [00:02:05] Yeah, I'm. I'm not sure. Do your own research. Whichever way tomatoes are widely consumed around the world.

Sascha: [00:02:11] Look, someone's going to be an expert out there listening. Hit us up at equitymates.com. Tell us the difference between a fruit and a hub. But let's get into it, Alec. As I touched on in my in chart, Australians remember the iceberg lettuce shortages of 2022. We did an episode on that last year. I've linked it in the show notes like now I see more produce shortages on a global scale. What's going on? 

Alec: [00:02:33] Yes, it seems to be the story that keeps coming up and the onion shortage is particularly being felt at the moment. Here's how much the price of an onion has increased over the past 12 months. In some of the hardest hit countries, Turkey over 700% and Pakistan over 300%. Ukraine 260%. The Philippines 180%. Pakistan nearly 150%. And Morocco 125%. The price of an onion has more than doubled in places all around the world, prices are soaring. Obviously, inflation is already a concern and higher food prices are just adding to it. And it's prompting countries to take action. Some pretty drastic action to secure supplies. Morocco, Turkey and Kazakhstan have halted some exports of onions. Which gives us echoes to India, halting exports of rice last year. And the Philippines has ordered an investigation into cartels hoarding produce. 

Sascha: [00:03:35] Yeah, there was a report about ten cabin crew members of Philippine Airlines who are charged with smuggling after they tried to bring in about 40 kilos of produce, you know, 27 kilos of onions, ten kilos of lemons and a kilo of strawberries and blueberries for good measure. I'm not sure if they're involved with cartels, but it sounds like they're cracking down on anyone who's bringing this produce in. 

Alec: [00:03:57] Yeah, it's pretty amazing when you see the lengths people are going to secure the supply of produce at the moment. And I guess it just shows how stark these shortages are. And we've seen restrictions go beyond onions as well. In some markets. We've seen them extend to carrots, tomatoes, potatoes, apples, which is then impacting their availability around the world. 

Sascha: [00:04:21] And they're seeing that in the UK the shortages are more widespread. It's almost impossible to make a salad at the moment. 

Alec: [00:04:28] I don't suppose you've noticed vegetable shortages? 

Sascha: [00:04:30] One Yeah, massive. 

Alec: [00:04:31] High. 

Sascha: [00:04:32] Yeah, Yeah. Just now. 

Alec: [00:04:33] What are you looking for then?

Sascha: [00:04:34] Particularly tomatoes. Now they're a bit insipid this time of year. 

Alec: [00:04:37] The UK is currently facing a salad crisis as there's a major shortage of a number of key salad ingredients lettuce, peppers, capsicum, tomatoes, cucumbers. Tesco and Aldi, two of the big supermarkets over in the UK, are limiting customers to three tomatoes, peppers and cucumbers as a precautionary measure. While as. Is also limiting customers on lettuce bags of salad, broccoli, cauliflower and raspberries. Morrisons has set a limit of two items per customer across tomatoes, cucumbers, lettuce and peppers. So basically, Sascha, all of the major supermarket chains in the UK are placing limits on some of the most common vegetable staples. 

Sascha: [00:05:23] But this global shortage isn't the result of just one issue. It's a domino effect that's created this lack of availability. So can you take me through those individual cases that are stacking up? 

Alec: [00:05:35] Sascha The reality is most of our supply chains these days are global. The fact of the matter is no one country can grow one crop year round. So take the UK for example. In the summer months, British growers produce about half of the tomatoes bought in the UK. But in the winter months, when the tomatoes aren't growing in the UK, they import them from Morocco and Spain. About 95% of the UK's winter tomatoes come from southern Europe and North Africa. Similarly, about 90% of the UK's winter lettuce comes from southern Europe and North Africa. And with extreme weather, extreme droughts in North Africa, that's decimated their crop.

Sascha: [00:06:18] And all those processes are so carefully balanced. If something happens to that crop, you can't suddenly amp up your production because of the way that seasons work.

Alec: [00:06:26] Yeah, exactly. And then, you know, people look at other alternatives like, can we grow more produce in greenhouses? But they take time to build. They take a lot of energy to keep warm. That's obviously a challenge in Europe at the moment. And because crops take so long to grow, it's not like another region can just pick up the slack from North Africa and southern Europe. It takes a season to grow a lot of these vegetables. So when supply is damaged, we say shortages.

Sascha: [00:06:55] Well, Alec, everything you've outlined seems to point to the fact that this is happening more and more. So Let's take a break and unpack that in just a minute. Welcome back to The Dive. If I could ask you a really quick favour, please go to your podcast player and give us a five star review. Right. Some nice words. It really helps us get in front of the ears of new people who might not have discovered The Dive. The small thing from you. It's a huge thing to us and a big thank you. If you've done it already, it makes such a difference. But Alec, let's get back to the topic at hand. We're talking about food shortages. It all started with onions, which was a news headline this week. But we're seeing that it's broader than just that food group.

Audio Clip: [00:07:42] Wholesale cost on things like salad crops, even onions. I would say they've gone up by at least a minimum of 80%, and that is across the board. 

Sascha: [00:07:53] Here's the big question: How much of this is climate related? I feel like I already know the answer as I say it, but tell me how it's playing out. 

Alec: [00:08:01] Yeah, I mean, that is the big question. And that was the question with the Queensland floods last year that led to the iceberg lettuce shortages in Australia. That was the question with the extreme floods in India last year, which saw 18 million hectares of rice crop lost. And that is again the question this year and that's the real challenge when it comes to extreme weather events. It's hard to say it's definitely climate related or definitely not climate related because people who want to argue that it's not climate related can point to other examples of extreme weather that decimated crops. I remember I don't know if you remember, Sascha, the massive banana shortage in 2011. A cyclone hit north Queensland. I think 75% of Australia's banana crop was decimated and we couldn't buy bananas.

Sascha: [00:08:50] And this is really off topic. There's something about one, there's a food group in the news all the time that you suddenly want it because I remember thinking I never need bananas. And then all of a sudden 13, you know, hugely expensive and it's all I wanted to put in my shopping bag. 

Alec: [00:09:06] Well, fun fact for you, fun supermarket fact for you. Bananas are the biggest sellers at supermarkets. They're the most sold item. And because they're the most sold item, prices are incredibly competitive. 

Sascha: [00:09:18] So it's like the hot chook, the white bread and the banana wars. They're the things I know it's going to be hard to beat. 

Alec: [00:09:25] Bringing it back to the climate question because that is the big question. I think, Sascha, the trend is almost undeniable at this point. The number of extreme weather events is increasing and we're seeing that all around the world, even just right now. We're seeing so many. A few weeks ago, the west Coast of the US experienced incredibly heavy rain and flooding. I think there was even snow in parts of L.A. In Spain right now, it's unseasonably cold, which has affected crops. But then in North Africa, we're seeing drought. Just the number of extreme weather events and the unpredictability of the weather seems to be increasing. And so that's my roundabout way to not quite answer your question: is this climate related? But I think the trend is certainly pointing in one direction. 

Sascha: [00:10:17] I appreciate your roundabout answer, Alec, but so then the follow up for me is what does this mean for us if we're not getting this food to our table, What impact is that having on the global population? 

Alec: [00:10:31] Well, can I just before we get to the food part of it, what does this mean for us? We need to take more action on climate change quicker. 

Sascha: [00:10:38] Yeah, absolutely. 

Alec: [00:10:39] Getting to the food part of the question so the world is incredibly food insecure at the moment. The UN estimates that more than 3 billion people cannot afford a healthy diet today. And these extreme weather events, these food shortages are only going to exacerbate that problem. And, you know, not as much in the UK or Australia, but across the developing world. This is where these food shortages will be most acutely felt.

Sascha: [00:11:09] How long do we think that these shortages, these food shortages are going to last? 

Alec: [00:11:13] Yes. So the onion shortage has actually been going on for a few months now. It's just become quite acute. And from what we could say, it doesn't look like it's going to ease any time soon. But the good news, Sascha, because we do need some good news, is that the British Retail Consortium, which is a trade association for UK retailers, doesn't think the salad crisis in the UK will last beyond a few weeks. So that is some good news. 

Sascha: [00:11:40] So Alec, I asked you, what can we do about it earlier? And you said take action on climate change, but are there some other points that we should be thinking about to reduce or help alleviate these food shortages moving forward? 

Alec: [00:11:54] Yeah, there are definitely some steps that countries around the world are taking to secure the food supply chains that we can certainly learn from if these extreme weather events are the cause of. Climate change and the trends continue and we see more of them. It is going to become more and more of a pressing political issue as we see more and more empty shelves from time to time. So probably three key things. First of all, diversifying sources of imported food. The UK crisis is largely because they're so reliant on Southern Europe and North Africa for crops during winter. So we might say the UK supermarkets themselves try and diversify where they're buying produce from. The second point we have often saying is increasing support for domestic food production. And you know this, this is obviously a good thing, but there are some caveats here. The first one is not every country has the land to be able to support their population. But the second thing is that wouldn't have actually solved the crisis here for the UK because lettuce and tomato simply aren't seasonal in the UK at the moment. So there's only so much you can do when it's not your season. But that does lead to the third and perhaps the most exciting and interesting point, Sascha, which is embracing new technology. And the case study here is the Netherlands, the tiny country of the Netherlands is the second biggest food exporter in the world by value. They punch above their weight so much in the agricultural space. It is pretty fascinating. They are on the cutting edge of greenhouse technology, lab grown made vertical farming, new seed technology, agricultural robotics. It is a pretty phenomenal story if you're not across it. The Netherlands has nearly 24,000 acres of crops growing in greenhouses, and for context, 24,000 acres is almost twice the size of Manhattan. And these greenhouses are pretty efficient. They can grow in a single acre. What it would take ten acres of traditional farming to achieve. And they also allow the Netherlands to grow produce year round. They're not as beholden to the seasons. So there are technological solutions to some of these problems that offer a more efficient and cost effective ways to grow crops. But ultimately, Sascha, I think at the end of the day we have to accept that when we're talking agriculture, we are beholden to the weather and the seasons. And so if we can find ways to make them less extreme, that's really the solution that we ought to be aiming for. 

Sascha: [00:14:34] I like I'm really impressed that you managed to end that on a silver lining. I feel like there's definitely a good news story in the in the avenues that the Dutch are exploring there. But again, something we can dig into on another episode. Let's wrap it up there. If you want to keep the conversation going, then contact us by email where thedive@equitymates.com or visit the website equitymates.com. And then please hit, follow or subscribe wherever you're listening right now. And then you're never going to miss an episode. Thanks for the five star reviews. Thanks to you, Alec, for joining me today. 

Alec: [00:15:07] Thanks, Sascha. 

Sascha: [00:15:08] Until next time.