On April 27, 2015, the California State Board of Food and Agriculture (CSBFA) announced that it will host a drought forum on Tuesday, May 5th at the Fresno County Fairgrounds. CSBFA has encouraged a wide range of people to attend, including farmers, ranchers, community stakeholders, and general members of the public. Attendees will have an opportunity to provide public comments regarding the drought crisis and related issues during the forum. Director Mark Ghilarducci of the Governor’s Office of Emergency Services and Bill Coyle, a drought coordinator for the California Department of Water Resources, will provide updates on current statewide water issues and drought response measures. CSBFA is updates the governor and the California Department of Food and Agriculture about issues impacting California agriculture and consumer needs.
California is currently in its fourth year of a severe drought. The United States Drought Monitor estimates that over 90 percent of California is currently experiencing “severe” to “exceptional” drought conditions. For farmers, the increasing scarcity of water has been devastating. According to the American Farmland Trust, California is home to 27 million acres of cropland. Nine million of those acres are irrigated farmlands, requiring a steady water supply. Crops typically requiring regular irrigation include vegetables (1.1 million acres), orchards and vineyards (3.1 million acres), and forage crops (1.7 million acres). Roughly 7 out of 10 irrigated farms in California depend entirely, or at least in part, on surface water allocated from state and federal projects. In 2014, farmers received zero water allocations from federal projects and only one-fifth of the water that they would normally receive from state water projects.
The shortage of water for agriculture has forced many farmers to fallow thousands of acres of their land in order to allocate what little water they receive to producing a successful harvest. Some reports estimate that in 2014 alone nearly half a million acres of California farmland were fallowed as a result of the water shortage. Other farmers have chosen to switch their crops to more drought-friendly varieties, including GMO seed varieties designed to thrive in soil with lower moisture content.
California is the nation’s leading producer of many food staples, including avocados, broccoli, tomatoes, spinach, grapes, tree nuts, and dairy. According to a study conducted by the University of California Agricultural Issues Center, in 2013 California exported $4.16 billion worth of almonds and over $2.4 billion in dairy products. Other key California exports include wine, tree nuts, grapes, rice, cotton, and beef. Overall, the California Department of Food and Agriculture reports that California’s 77,900 farms earned over $46 billion for agricultural exports in 2013.
To truly comprehend the impact that California’s drought may have on food prices, it is important to have an understanding of just how crucial California’s agricultural industry is to the nation and the world at large. Many people refer to California as the nation’s breadbasket. The rich soil and ideal weather conditions make it some of the most fertile planting soil in the world. It is no surprise, therefore, that California produces 400 different types of agricultural commodities and provides roughly half of the nation’s fruits, vegetables, and nuts.
The extent to which California’s drought will have an impact on produce prices depends on the overall severity of the drought and how the drought affects total crop yields. When it comes to produce, the most critical concern during a drought is the diminishing groundwater supply, which is typically needed to provide consistent irrigation to fruit and vegetable crops. In response to a groundwater supply shortage, many farmers choose to plant a smaller amount of a particular crop, or to plant an entirely different crop that is more tolerant to drought conditions.
According to the United States Department of Agriculture, when it comes to fruits and vegetables, any production impacts that may lead to price increases typically manifest at the supermarket shelves within one month. Produce is highly perishable, meaning that farmers cannot hold onto their produce until market prices are more favorable and consumers are more willing to buy. Other factors affecting the price of produce are labor wages, competitive imports, and fuel prices.
As a consequence of the growing scarcity of water for agriculture, the prices of fruits, vegetables, and other food products are expected to increase. For many farmers, the increasing cost of water and fallowing of fields requires them to raise the prices of the their crop yields.
How much of a price hike should consumers anticipate paying? According to the United States Department of Agriculture’s (USDA) reports, “[i]ncreases in retail prices for fresh fruits and vegetables in 2014 were primarily driven by an increase in the prices for citrus fruit.” Additionally, “[p]rices for fresh vegetables fell in 2014 after seeing higher than average price increases in 2013.”
These price increases will likely increase into 2015. USDA estimates that during 2015 supermarket prices will increase an additional 2 to 3 percent over 2014 prices. In particular, fresh fruit prices should rise between “2.5 to 3.5 percent and fresh vegetable prices 2.0 to 3.0 percent.” The USDA cautions, however, that California’s status as a crucial food producer gives it “the potential to drive prices for fruit, vegetables, dairy, and eggs up even further.” Ultimately, the USDA predicts that produce prices will continue to rise.
Other researchers have echoed the USDA’s conclusions regarding the escalating prices of produce as a result of California’s historic drought. For example, a study conducted by Timothy Richards at the W.P. Carey School of Business at Arizona State University predicts that the California drought could increase avocado prices up to 28 percent. According to the USDA, California produces 88 percent of avocadoes consumed throughout the United States. The study also concluded that the price of lettuce could increase between 62 cents and $2.44.
Richards believes that the most significant produce increases will occur with “avocadoes, berries, broccoli, grapes, lettuce, melons, peppers, tomatoes, and packaged salads.” Additionally, the California Farm Bureau has “projected that the average American family will spend about $500 more on food this year because of the drought.”
Of course, estimations regarding potential food price increases are not evaluated in a vacuum. Many other current events and factors play a part in determining whether consumers will pay more or less for fresh produce in the coming months. For example, the California Avocado Commission reports that part of the reason for the increased price of avocados, which rose 16 percent between 2013 and 2014, is the alternate bearing cycle of avocado trees. One year, the tree will produce a high volume of fruits, while producing substantially fewer fruits the following year. In 2013, California’s avocado yield was estimated at 500 million pounds. In 2014, total crop yield was projected at 350 million pounds. The current estimate for the 2015 crop is roughly 327 million pounds.
The forum will be held from 10:00 a.m. to 1:00 p.m. in the Industry Commerce Building at the Big Fresno Fair, 1121 S. Chance Avenue, Fresno, CA 93702.