Questions raised after NZ-grown onions found to be cheaper in UK compared to NZ
Food & Fibre
Food & Fibre

Questions raised after NZ-grown onions found to be cheaper in UK compared to NZ

A recent discovery of New Zealand-grown brown onions being sold at a British supermarket for a lower price than in New Zealand has sparked online discussions about this peculiar situation. 

A tweet brought attention to the pricing of Tesco onions, which were being sold at 95p (£0.95) per kilogram, or  NZ$1.96. In comparison, the same onions were priced at $2.99 per kilogram at Countdown and $2.49 at Pak'n Save in New Zealand.

James Kuperus, the Chief Executive at Onions New Zealand, told Stuff that the landed price of New Zealand onions in Britain, which accounts for the total cost of transporting the product there, was around $2 per kilogram. He added that individual exporters and growers determine the price they are willing to sell at.

New Zealand is not a cheap supplier of onions on a global scale, a fact that has been heightened further because of a recent crop shortage due to adverse weather events this year. 

The price label suggests that the 95p cost is not in fact the regular price that Tesco would sell the onions but an 'Aldi price match'. It is likely that Aldi sourced their onions from a cheaper-producing country like Egypt, leading Tesco to match the price and potentially incur losses.

It is worth noting that Britain does not apply VAT sales tax to fresh food, which could also contribute to the price difference. New Zealand exported 6400 tonnes of onions to the UK this year, and on average, between 150,000 and 180,000 tonnes of onions are exported annually.

New Zealand's onion supply to the UK is also typically limited to a short counter-seasonal window, which does not compete with local growers or farmers in the UK.

The recently signed free-trade agreement between New Zealand and the European Union was welcomed by the New Zealand onion industry. 

The agreement aims to eliminate tariffs amounting to over $6 million annually on onion exports to the EU and address technical trade barriers. According to Kuperus, the EU is the primary market for New Zealand onion exports, and the tariff savings of 9.6% level the playing field with competitors such as Chile and South Africa.

With the free-trade agreement and the upcoming agreement with the UK, New Zealand expects to become more competitive as a counter-seasonal supplier in both markets.