The importance of the onion from a culinary, historic, and economic standpoint cannot be overstated. Plus, I love to eat them.
This post will focus on the culinary significance and historical market dynamic, underpinning how the onion has shaped modern commodities markets. The onion’s versatility from the standpoint of its culinary application and economic impact are both layered with ripe examples of market utility and consequences.
On the culinary side, local Chicago-based chefs tend to agree:
“Onions and alliums in general, [were] not the first to be domesticated but became part of the foundation of every cuisine in the world. If wheat/corn/rice were one of the drivers for settlements and community, onions gave us something to celebrate in those communities.”
- Chef Wyatt Brinegar, former Chef at Alinea, The Aviary & The Office in Chicago.
“Onions, I feel, are the most approachable and versatile of the allium. With the size you can get a great yield and when prepared in different manners can be used as a supporting ingredient (like in a mirepoix) or even its own dish (like onion rings). They also have a nice, rich flavor when caramelized without gaining pungency when the flavor concentrates. At The Aviary [in Chicago], we actually caramelized onions and turned them into a syrup to make an interesting savory sweetener in a cocktail that had dry sherry as the main flavor profile.”
- Chef Bryce Bandelgar, Manager at The Aviary & The Office.
It’s worth mentioning that Wyatt and Bryce are trained chefs. Wyatt is a master of culinary technique and all kitchen workings. Bryce, who became Alinea Chef Micah Melton’s ice room protégé at The Aviary, has one of the best palettes for flavor combinations of anyone I’ve ever met.
So what impact did onions have on today’s markets? In short, onions are one of the few commodities that are regulated to prevent futures trading. The regulation was essentially a knee-jerk reaction to one man’s successful scheme to buy up all the onions and manipulate prices. The result was Congress, led by Gerald Ford, passing a bill that banned onion futures trading. The Chicago Mercantile Exchange (CME), aka the Merc, tried to stop the ban but didn’t want to risk exposing other futures markets and stopped short.
For great context, NPR’s Planet Money podcast in 2022 published an update to a fascinating story called, The Onion King. The Onion King is about how an onion producer and futures trader in the 1950s named Vincent Kosuga cornered the market and made millions. The podcast claims that what Kosuga did could never be replicated because the markets are much more efficient today. However, in the age before the internet, Kosuga’s conduct alienated the market so much that producers successfully lobbied Congress to pass the Onion Futures Act, which in 1958 banned the futures trading contracts that helped stabilize the price of the allium. And to this day, there is no futures market for onions. In the podcast, Nate Kauffman of the Federal Reserve Bank of Kansas City, explains that the important function of the futures market is that it helps to stabilize prices by allowing for two things: price discovery and risk management. These two functions make for a healthier market because without futures, the result is a less efficient market that typically translates into higher prices. According to research from David S. Jacks in Explorations of Economic History, “Futures markets are associated with and most likely caused lower commodity price volatility. So no futures market, more price volatility.” - Episode 657: The Tale Of The Onion King
Source: https://fred.stlouisfed.org/series/WPU01130216
In the book, The Futures - The Rise of the Speculator and the Origins of the World’s Biggest Markets, author Emily Lambert outlines the relationship between Chicago and the onion market:
“Onions were fated to trade in Chicago. The name of the city was derived from shikaakwa, the Native American word for a stinky, wild leek plant that grew around the river, although the Merc’s members preferred to trade the hard and pungent variety that farmers grew on small plots from Minnesota to New York.
Business was personal to onion growers too. The games that traders played in the pit had repercussions in farmland. In 1950 the price of onions fell from $5.05 to 44 cents in seven months, a decline that was difficult to ascribe entirely to supply and demand. Futures and supply were intertwined. When prices in the pit got high, onion farmers planted more onions to take advantage of that, and overprinting led to gluts. When prices were low, farmers were unhappy and felt that onions were underpriced.
Kosuga was one of the liveliest characters the Merc had ever seen. On his land, he had expanded a cafe into a restaurant called the Jolly Onion Inn, where he was the chef. His mother was a Russian Jew who had been taken in by nuns and converted. Kosuga, a dedicated Catholic, gave so much to the Vatican that he had private audiences with three popes and said he rode in the pope’s private elevator. But whatever god he worshiped, he was a man with no fear.
Michigan congressman Gerald Ford proposed a bill to ban onion futures trading. The Merc’s president, E.B. Harris, fought off the bill, defending the exchange’s turf as he spoke to the Senate Agriculture Committee in August 1957: “If there be abuses in [onion] futures trading, the Chicago Mercantile Exchange will be the first to condemn and help correct….But we submit that burning down the barn to find a suspected rat is a pretty drastic remedy.” ~ Chapter +0.04, Onions
And there you have it, a brief history of onions, which like markets (and ogres) have many layers. I asked my friend and fellow onion fan if he had any thoughts to close out this post and he delivered:
“Onions are amazing. So versatile. The bedrock of flavortown. Two thumbs way up.”
- Guy Carmeli.