Chris Pawelski works on his onion farm in New York State. If Canadian onions continue to flood the market at prices below his cost of production, he fears his farm will go out of business. Photo courtesy of Chris Pawelski
EVANSVILLE, Ind., Feb. 24 (UPI) -- American onion growers say they cannot compete with the price of onions imported from Canada -- and they want the U.S. government to find out why they are so cheap.
Shay Myers, who grows onions in Oregon and Idaho, said his profits dropped by 25 percent in 2019 as prices fell and he lost customers to Canada.
Nearly 3,000 miles to the east, in New York, grower Chris Pawelski said cheap Canadian onions flooded the market and he was unable to sell any of his 2019 crop.
"This may put me out of business," Pawelski said. "I can't sell my onions. How do I possibly farm when I haven't paid my bills for the 2019 season?"
Prices for Canadian onions are so low that some in the industry think Canada's government is subsidizing its growers. Such an action could violate international law.
The World Trade Organization prohibits countries from directly subsidizing exports, said Alan Sykes, a law professor at Stanford Law School.
Countries are allowed to broadly subsidize their agricultural industries as a whole. But if those subsidies harm an importing country's domestic producers, the affected country can impose import duties to level the playing field, Sykes said.
"Canada does not unfairly subsidize its onion industry or its onion exports," Agriculture and Agri-Food Canada spokesman James Watson told UPI in an email.
"Canada does not have commodity-specific programs to support the onion industry and does not provide export subsidies to its vegetables sector," he said. "As part of the WTO Nairobi decision, Canada's export subsidy commitments for vegetables were eliminated in 2016."
Watson added, "Farmers across Canada have access to a suite of Business Risk Management programs to help them manage significant risks that threaten the viability of their farm and are beyond their capacity to manage."
He would not elaborate on the amount of monetary support onion growers receive from those programs.
Greg Bird, the executive director of the Michigan Onion Committee, said he suspects Canadian growers are getting some kind of help.
"Our onion prices are being suppressed enough that it's just not feasible that [growers in Canada] aren't getting some sort of subsidy," Bird said.
Senators seek answers
After fielding complaints from the National Onion Association and other onion growers in their state this winter, U.S. Sens. Kirsten Gillibrand and Chuck Schumer, both New York Democrats, asked the U.S. Trade Representative and the U.S. International Trade Commission earlier this month to investigate.
"Farmers across the country have been struggling to keep up with growing production costs, while Canadian exporters have been able to dump cheap onions onto the market at prices comparable to 30 years ago," Gillibrand said in a statement.
"Since Canada has similar production costs, the only way this could be happening is through some type of government subsidy that is lowering their costs. This would amount to an unfair trade practice and needs to be immediately investigated," she said.
The U.S. International Trade Commission said Friday that it was preparing a response to the senators. A spokesperson for the office did not know when that response would be sent.
The Office of the U.S. Trade Representative did not respond to a request for comment.
In the United States, onion farming is a $9 billion-per-year industry, said Greg Yielding, executive vice president of the National Onion Association, based in Greeley, Colo. The Produce Blue book notes that the United States harvests about 125,000 acres, which produce 6.75 billion pounds each year.
Onions are grown all over the country, though Washington, Idaho, Oregon, California, Texas, Georgia and New York produce the most.
Canada's onion industry is much smaller, grossing under $1 billion annually.
According to the National Onion Association, Canadian onions were selling recently in New York at $9 for 48 pounds. In Michigan, the price for those onions was closer to $7 per 50 pounds, the Michigan Onion Committee's Bird said.
Depending on where they are in the country, American farmers say they need at least $10 to $13 per 50 pounds to cover their production costs -- and just break even.
"Canada is a first-world nation in the Western Hemisphere," grower Pawelski said. "Their production costs are very similar to ours. How are they able to sell two 24-pound bags of onions in New York for $9? It doesn't make sense."
Canadian farmers do have some advantages over American growers, industry experts say. They pay a little less for migrant labor than American farmers do. Also, the exchange rate works in their favor when selling in the U.S. market.
But that exchange rate also hurts them during the growing season. Most of the inputs -- like seeds and fertilizer -- come from the United States. That means they pay higher production costs, Bird said.
"We don't know what exactly is going on," the National Onion Association's Yielding said. "But these numbers don't make sense. Something's not right, and we want it investigated."