Posts Tagged “labor costs”
The California drought, which has prompted emergency conservation efforts in its fourth year, has forced California farmers to abandon thousands of acres or pay more to water them, according to a recent article in the Pittsburg Tribune-Review. Anxious grocers and restaurants are watching closely for impact on the supply and price of berries, walnuts, avocados, tomatoes and other pantry staples.
Over a fifth of all American farms growing fruit, tree nuts and vegetables are in California, according to the USDA. The Golden State grows more than 200 crops and is the nation’s dominant supplier of nuts and produce including grapes, olives, peaches, raspberries, strawberries and lemons.
Issues on the farms have not reached the produce aisle. Typically, increases in farm prices for fresh fruit and vegetables show up at the retail level a month later. But a confluence of factors have counterbalanced the price pressures from water scarcity, the Tribune-Review article states.
A complicated array of transportation and labor costs, the contracts that restaurants and supermarkets have with suppliers, market competition and macro economic trends are among the factors that determine the price of food. Only 19 cents of every dollar spent on food is tied to farm costs, said Annemarie Kuhns, a USDA economist.
Price inflation has been tamped down so far because the strength of the dollar against foreign currencies made foreign produce cheaper, Kuhns said. Low fuel prices has eased transportation costs.
That could change as fuel prices rebound and the drought extends further into the growing season. Water-intensive crops such as berries and nuts, where California holds an overwhelming share of the market, stand to be the most affected, said Timothy Richards, a business professor at Arizona State University.
“If we don’t have that supply from California during the season, then prices will run up,” he said.
California accounts for 86 percent of avocado production in the United States, and if unable to replace that supply with avocados from Mexico, it would have to raise menu prices.
Salinas Valley mixed vegetables – grossing about $4200 to Dallas, $7100 to New York City.