Drought Could Affect Current and Future Food Prices

Drought Could Affect Current and Future Food Prices

March 18, 2014

California Farm Bureau Federation reported today that with hundreds of thousands of acres of farmland expected to be left unplanted this year due to water shortages, market analysts and economists say shoppers will likely begin to see higher prices on some food items later this year.

Sean Villa, president of Great West Produce, a produce broker in Los Angeles County, said he expects a number of products to be affected later this year, including broccoli, sweet corn and melons from growing regions in Fresno, Mendota and Huron, where farmers will likely cut acreage due to water shortages.

Gary Tanimura, a vegetable grower based in the Salinas Valley, said he will have to reduce his summer melon production in the San Joaquin Valley by about 20 percent due to lack of water.

Tanimura said spring and fall lettuce production in the San Joaquin Valley also could drop by 25 percent to 30 percent this year.

Cindy Jewell, director of marketing for California Giant Berry Farms in Watsonville, said farms in the Oxnard growing region—which typically plant a second crop in the summer for fall production—may not be able to do that this year.

“If the water situation continues to be this severe, there may not be as many of those acres replanted for fall production,” she said, adding that if the drought continues into fall and winter, when most strawberries are planted, it could affect what’s planted for next year’s harvest.

Because California supplies nearly 90 percent of the nation’s strawberries, Jewell said it is not likely that there will be much of a production shift to other regions.

“It’s not like someone else could step in and do that,” she said. “It’s all about climate and location.”

On the beef market, the California drought may have the most impact on niche products such as grassfed, organic or natural beef, said Lance Zimmerman, a market analyst for Colorado-based Cattlefax. Those programs typically rely more on local or semi-regional supplies, he said.

Retail beef prices have risen nationwide, Zimmerman said, because of improved demand and continued declines in supply caused by several years of drought in other major beef-producing regions in the Southern Plains and the Southeast.

In states where drought conditions have improved, ranchers are now trying to build back their herds, so they’re not sending as many animals to market, particularly mature cows, and that has driven up prices on meat cuts such as chuck roast and ground beef, he added.

On the produce market, fair weather accompanying the drought has, for now, caused vegetable crops to come to market ahead of schedule, creating an overlap of products from the desert region and the San Joaquin Valley.

That, combined with reduced demand from East Coast markets due to severe winter weather, has led to temporary oversupplies of some vegetables, Tanimura said, while Jewell reported that berry production has also been stimulated by warm winter weather.

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