Day 368: The Logistics Of Onion Transport
About a year ago, on a drive back to New York from Michigan, I passed by an onion truck. That was literally all it was. No other produce, no other product, just pallets and pallets of onions. Halfway through Ohio, I turned off to get some gas and bevs [and to relieve some gas and bevs, noamsain?] and when I got back on the road, I passed the same onion truck. It happened again in Pennsylvania. And again in the Poconos. When I last saw the truck he was hightailing it past New York on I-80. It’s very normal to pass the same vehicles over and over when on a long road trip, but this one threw my mind through a loop. This one was different. It made a question burn into my mind:
Just how profitable is the onion business, anyway?
In order to figure that out, we need to break down the truck. The onions were [seemingly] in 40 pound bags. Each pallet had rows of 3 stacked about 10 high. So each pallet most likely had 24 bags of onions. So each pallet was 1200 pounds. It wasn’t a big truck, but to my recollection, there was 3 rows of pallets that were probably 7 deep. So let’s assume that this truck had 21 pallets, or 25,200 pounds of onions. Great, fantastic, our magic number is 25,200.So, it would be safe to assume that at $0.99 a pound, the street value of the truck is $24,948, but for simplicity’s sake, lets call it an even $25K.
But that’s retail and that onion truck is not selling for retail. The stores get them from a wholesaler, who get them from the onion truck. The main goal of a grocery store is to sell product at a 40% margin and with something that generally doesn’t spoil, like onions, the buying point is really close to that margin goal. So let’s assume that the store buys it from the warehouse at $0.60 per pound. But the wholesaler also has to make money, so it’s entirely feasible that the onion truck that I saw was selling their product at $0.50 a pound. With that in mind, the value of the truck is now at $12.5k. Let’s go further.
Let’s talk about gas. The onions weren’t on a semi-truck, but the truck was slightly larger than a moving truck. The average gas mileage of a semi is 6.5 MPG, while the average moving truck is around 12-14 MPG. So a safe assumption would be that the onion truck gets 10 MPG. The average price of diesel in 2020 was $2.55 per gallon. Now we have to consider where the onions actually came from. A majority of American onions come from the Pacific Northwest, mainly Idaho and Washington state. Considering that it was heading east on I-80, it surely didn’t come from the south. So let’s assume that the onions came from Idaho. Let’s also assume that the truck was heading to Schenectady, NY, because why the hell not? The distance between Wendell, ID and Schenectady is a whopping 2,374 miles. That’s a little too much. I’m going to be generous and say fuck it, let’s assume the onions are from Iowa instead. Iowa City is 1,169 miles away from Schenectady. Much better. So the cost of fuel for the onion truck would be somewhere around $3000. Let’s also tack on about $100 in tolls, since the passenger cost is around 50. The new value of the truck is $9.4k.
But guess what? The truck has to go back to Iowa. Rats. So now we’re looking at like $6.5k, because less weight will give better gas mileage. But now we have to pay the driver. The average truck driver makes $0.28-$0.40 per mile. This is a beat down onion truck, so let’s assume that the guy makes the minimum. Poor guy. On his 2,338 mile roundtrip, he made $654.64. He also stayed the night in Schenectady and ate Red Lobster, so tack on $146.36 to make the driver a cool $800. So now the truck is worth $5.7K.
How long did it take to load the truck? To harvest and bag the onions? How much manpower did it take? I have no clue, but the minimum wage in Iowa is $7.25 per hour. Let’s assume that this truck was the group effort of 10 people that made $100 for their troubles. Now we’re sitting at $4.7k. But then you also have to consider the cost that went into cultivating the said onions. The fertilizer, pesticides, water and don’t forget the cost of land and large tractor equipment. These costs could easily chop that in half, but that’s something that’s out of my wheelhouse. I also ignore the fact that this onion truck was really unsuitable, as it’s a lot more profitable to have giant semi-trucks filled with onions rather than a repurposed box truck. But oh well. This is just based off my one observation that I committed to foggy memory.
My point is that onions are fantastic. They taste good, they’re cheap, they’re versatile, they’re good for your colon, they make the world go ’round. But if you think there’s some bigwig onion tycoon out there with a monocle, smoking cigars and sitting on piles of cash, you are sorely mistaken. It is not at all profitable to grow onions. In fact, for all we know, they might take a loss some years. But the fact that they’re willing to put in the work to provide a vegetable that we all love is highly commendable.
So here’s to you, onion farmers! You are truly the backbone of America.