Posts Tagged “California drought”
The most enduring impacts of the four-year California drought may be felt in the citrus industry, where tree removal and replanting take acres out of production for about five years. If they’re replanted at all.
Valencias were the first and easiest target for removal, given the decline in demand for that fruit, but some navel groves have come down too. Bulldozers are still shying away, though, from mandarins.
Bob Blakely, director of industry relations for Exeter-based California Citrus Mutual, estimates citrus tree removal for 2014 and 2015 will total up to 25,000 acres.
“It’s being escalated because growers don’t have enough water,” Blakely said. “They were taking out less productive, lower quality groves in 2014. This year we’re seeing some good-quality groves going out just because growers don’t have the water to take care of their trees. They’re having to make tough decisions and push out better trees than they pushed out last year.”
“Underperforming groves have been targeted to eventually take out or replace,” said Seth Wollenman, sales and brand manager for Lindsay, Calif.-based Suntreat Packing & Shipping Co.
Some lost acreage has already been replanted with more desirable varieties. New trees use less water than mature trees, and some growers have seen the drought as an opportunity to accelerate redevelopment.
“Where they have trees available they’re going ahead and replanting, betting that this drought will break and that they’ll have water to bring those trees on into production,” Blakely said. “I think it’s going to be several years before we see the kind of yields we had prior to the drought.”
California navels will start in mid-October if they repeat their performance in the last two years, given the early starts of other crops in the state. Navels typically start around Nov. 1.
Yields are likely to equal last year’s, Blakely said, but tree removal will push volume down. Weather could pose problems too.
“If we don’t get some rains in the fall to size it up, we could still be looking at small sizes and fewer boxes,” he said July 24.
The California Department of Food and Agriculture and USDA will release the annual navel estimate in the second week of September. Valencias, a summer fruit, continue to harvest in the fall.
Mandarins
On the easy-peel side, satsuma oranges are expected to arrive ahead of navels, in late September or early October. Clementine production should start a little after the navels.
“They’re picking clementines up until Christmas or so, and the murcotts are the spring variety,” Blakely said.
He expected California mandarin volumes to be up this year as new acreage continues to come into production.
“That’s going to continue to trend up for several years.
Southern California valencias – grossing about $7000 to Boston.
Remember only a few summers ago when produce trucking rates from California to the East Coast were hitting $10,000? It hasn’t even come close to that in 2015 – and there appears to be a number of factors why.
As we head towards the Labor Day weekend final shipments to receivers for the holiday are now underway, if not already delivered. Don’t expect major rate increases.
East bound coast to coast rates in the summer of 2014 that were in the $8000 range are closer to $6500 this summer.
Here’s my take on why produce trucking rates are off.
***Less California Produce Volume. The 5-year California drought is beginning to take its toll on agriculture and it’s going to get a lot worse unless the El Nino weather pattern in the Pacific Ocean changes things this winter.
The San Joaquin Valley is being hit relatively hard by the drought and it is adversely affecting volume on many crops ranging from cantaloupe and honeydew and other melons to stone fruit, tomatoes and citrus. In the Salinas Valley, which has not suffered from the drought as much as in the San Joaquin Valley, all types of lettuce volumes have been like a roller coaster this summer.
The highest rates from California to the East Coast this year have been in the $8,000 range, and those were only for a limited amount of time.
***Rail Competition. While the railroads provide only limited competition, it still has an affect of produce trucking rates. After all, the rail rates are based trucking rates and often offer 10 to 15 percent less to haul. Still, we’ve seen a couple of rail related companies go out of business this year. The railroads have a history of dropping produce related services for other, less perishable products.
***Rules and Regulations. The insanity of excessive rules and regulations from both the federal and state levels continues, and it is having disasterous effects on owner operators. Rates are not keeping up with increasing costs of operations, although lower fuel prices have helped. Still, when you have the California Air Resources Board and their emission standards and other business killing rules, plus the feds pushing to implement Electronic on-board Recorders, not to mention many others, it all adds up.
***Qualified Drivers
The lack of qualified drivers continues to be a problem, although it could become a lot worse when the economy turns around. Attracting young people into the trucking industry continues to be a challenge. It’s a hard life and there’s certainly easier ways to make a living.
***Mexico. Over the past 20 years more and more produce is being grown in Mexico, and much of it is being driven by investments from American farming operations. Mexico has cheaper labor and less government interference in their operations. At the same time there is less produce being grown in California — Bill Martin.
Taking a look at Salinas Valley vegetable shipments this summer and you get a good hint at one reason why California produce have been less than stellar.
California’s coastal valleys near Santa Maria and Salinas have experienced unusually warm nights all summer long, which has resulted in some hollow hearts and other issues that basically reduced Iceberg and other varieties of lettuce volume and the weight of each head. Less tonnage per acre has resulted in a demand-exceeds-supply situation, with Iceberg lettuce prices topping $20 per carton.
The lack of lettuce quality is closer to what you normally find in late September or October. The lighter amount of lettuce shipments could continue until the end of the coastal valley deals in mid- to late October. In fact, improvements may not come until the transition to Huron in the San Joaquin Valley in the fall. However, many grower-shippers won’t be planting lettuce in Huron this fall because of the California drought.
The shortage appears to be mostly with various types of lettuce category, while supplies of broccoli, cauliflower and most of the other staple vegetable volumes are adequate.
Something else to consider is El Niño. Meteorologists studying the Pacific Ocean say the warm water patterns are surfacing from the equator to much farther north off the California coast which may mean very heavy fall and winter rains. If this weather pattern becomes a reality many low lying produce fields could become flooded, cutting into acreage and shipments.
Most are predicting that if the El Niño conditions that currently exist do bring huge amounts of rain, they will probably start in late September, with the brunt of the storms hitting from December through February. If that occurs, produce shipments could get cut short, and next season growers would have to delay planting in many fields. Enough speculation. We’ll have to wait and see.
Salinas Valley vegetables – grossing about $4600 to Chicago; $6700 to New York City.
Here’s a round up of some of the major Western produce shipping areas including volume and freight rates.
California Produce Shipments
Big volume produce shipments continue out of both the Salinas Valley and the San Joaquin Valley of California. We’re certainly not witnessing any record rates this year. This is believed due to several factors. For example the California drought most certainly has resulted in fewer plantings of fruits and vegetables. Taking up at least some of the lack is Mexico that continues to increase production. Mexico not only has cheaper labor and production costs, but fewer restrictive rules and regulations than California.
However, rates were generally stagnant or in many cases lower this week as there was a surplus in refrigerated equipment. Rates on Salinas veggies plunged by double digits in some cases, as vegetable shipments have been less than spectacular this season – in part due to numerous shipping gaps.
Salinas Valley Produce Shipments
The Watsonville district continues shipping strawberries and other berries in good volume. Strawberries are averaging about 950 truck loads per week. Meanwhile, dozens of vegetables continue out of Salinas ranging from various types to lettuces to broccoli, and cauliflower, among others.
Salinas Valley produce – grossing about $6800 to New York City.
San Joaquin Valley Produce Shipments
From the Westside District, cantaloupe, honeydew and other melons are increasing in volume….Watermelons are averaging about 300 truck loads weekly and increasing in volume….There also is good volume with stone fruit ranging from peaches to plums and nectarines….Another big crop of grapes continues to be shipped…Pear and apple shipments are just starting from Northern California and the San Joaquin Valley. Between 1.5 and 1.7 million boxes of apples are forecast and should continue until mid October.
Central San Joaquin Valley fruits and vegetables – grossing about $6100 to Atlanta.
Southern California Produce Shipments
Avocado loadings continue in good volume, although it is declining as we head into the latter part of the shipping season….Tomatoes are big item. Vine ripe tomato loadings continue from the Oceanside and San Diego areas, including produce crossing the border into San Diego from Baja California.
Southern California citrus, avocados and tomatoes – grossing about $4800 to Houston.
Here’s more proof that some basic, fundamental changes are taking place in California regarding produce trucking. The two most cited reasons are excessive regulations – and the drought. This deals with the drought.
Many folks recalled not too many years ago when it was a rite of spring that truck rates would go crazy in California. In particular, the rates would be lowest the first part of the week, but might increase 30 to 50 percent by the end of the week as truck supplies were depleted. While some of the reasoning can be placed on long term negotiated rates (for a year, or at least a shipping season), it is suspected that less production or volume is coming out of California while Mexico and Canada are increasing. (Also, see the interview with Kenny Lund of the Allen Lund Company, from June 4th).
More California crop acreage is being removed from production in 2015, according to the California Department of Agriculture.
At 564,000 acres, fallowing will be up 33% over last year as growers cope with the state’s fourth year of drought, according to the preliminary estimate by University of California, Davis researchers.
They compared this year’s drought effects to years of average water supply. Surface water is even scarcer in 2015 than last year.
Growers are forecast to pump 6.2 million acre-feet of groundwater to partially make up for an 8.7 million shortage. The added pumping is projected to cost $595 million. When pumping costs, job losses, livestock, dairy and other factors are added in, the state’s agricultural industry anticipates drought losses of $2.7 billion.
The estimate pegs direct job losses at 8,560 full- and part-time jobs. But when spillover effects and increased pumping costs are factored in, total losses are closer to 18,600. The loss in irrigated crop revenues statewide for vegetables is estimated at $107.7 million, and for orchard and vines at $82.8 million.
If the California drought continues, the consequences for produce trucking, consumers and agriculture will become even more severe.
Salinas Valley vegetables – grossing about $5100 to Chicago.
San Joaquin Valley fruit and vegetables – grossing about $7800 to New York City.
It’s looking like another banner year for California grape shipments as the desert winds down and the San Joaquin Valley cranks up.
With the end of May, Coachella volume appeared down 20% from 2014. Early starts can make for early finishes. Some Coachella shippers are just finishing their desert grape season, about a week early. However, a few shipments will occur in the last week of June….Mexican grape shipments face a similar situation. Some loadings will end the around June 20th, when July 4th is typical.
While Coachella and Mexico are finishing up early, shipping gaps are not seen because the San Joaquin Valley grape shipments are ahead of schedule. Initial light harvests are expected by June 20-22. Shipments should be moving into good volume by the second week of July.
Preliminary estimates for California grape shipments out of the San Joaquin Valley are pegged at 113.3 million 19-pound boxes for 2015. This is up from 110.9 million last year. The state’s record, set in 2013, was 116.3 million. Loadings of California grapes should be available through November.
California Tomato Shipments
California shipped its first load of mature green tomatoes on June 2. Several more loads were shipped during the week of June 8th, putting the crop about a week ahead of schedule. If all goes as expected, California will have mature greens through about mid-November. The mature green tomato is popular with foodservice companies and also is used by repackers across the country. Acreage is down about 10 percent this year due to the California drought.
While the California season gets under way, there are also tomatoes from several other locations including crossings from Mexico into California, Arizona and Texas.
San Joaquin Valley tomatoes, stone fruit and vegetables – grossing about $5000 to Chicago; $7400 to New York City.
The harvest of California navel oranges is winding down as July approaches and the season’s production could be close to 81 million cartons, although late season citrus is requiring more grading as marketable product keeps falling. At the same, Valencia orange shipments are replacing navels.
For much of the season, utilization rates — the percentage of fruit that could be sold as fresh — remained in the low 80s, but now it has dipped into the 70s as the crop has been picked over. Subpar oranges are diverted to juice.
Meanwhile, harvest is under way for a diminished Valencia orange crop. Growers this season are expected to ship a 20-million-carton crop, down from 22 million cartons last year and a little more than half the 39 million cartons produced in 2001-02.
Only about 25 to 30 percent into that crop has been harvest, but the Valencias are coming out fewer than expected.
The harvest hits as a fourth year of the California drought and its related federal surface water shutoffs have resulted in many growers taking trees out of production. It is estimated as many as 50,000 acres of orange and other citrus trees would be bulldozed.
The orchard removals could take a particular toll on Valencia trees, which were already being replaced with navels and other more lucrative citrus varieties before the drought began. Valencia acreage has seen a precipitous decline in recent years; there are about 34,000 bearing acres this year, down from 65,000 in 2001-02.
San Joaquin Valley produce rates for citrus, veggies and fruit have been fluctuating by nearly a $1000 in a given week to New York City. On average, rates appear to be around $7700 to the Big Apple.
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.
As we rapidly approach the New Year, vegetable volume will be increasing from Mexico through Nogales, as well as the California desert. Here also is a summary of what recent rains in drought stricken California will mean for produce haulers in the future.
Mexican vine-ripe tomato shipments will be moving into volume shipments around January 1st.
Mexican strawberry volume is increasing along with strawberries from the Plant City, FL area as well as fruit from Ventura County, CA.
Southern California strawberry shipments started the week of December 15th with very light volume. However, increasing the volume has been hampered due to rainy, cool weather. Mexican strawberry shipments have been steadily increasing, but decent volume won’t be available until the first or second week of January.
California Drought Update
A week of storms that swept through California in mid-December came nowhere close to ending the state’s drought. But with continued warm weather in the forecast, conditions are good for rapid crop growth — and possible winter shipping gaps. Celery out of Oxnard and iceberg lettuce out of Yuma, Ariz. are both coming on fast — where less rain fell but warm weather prevailed.
It has taken a crop that was well ahead of schedule and made it even more so,. The combination of rain, with mild conditions has created accelerated growth that is unprecedented. This is expected to result in shipping gaps during the next several weeks.
A NASA Jet Propulsion Laboratory study released Dec. 16 found the water storage in the Sacramento and San Joaquin River basins was 11 trillion gallons below normal seasonal levels. It could take years to replenish that. The study was based on satellite data from earlier in 2014.
Mexican vegetables crossing at Nogales – grossing about $1000 to Los Angeles.
Imperial Valley/Yuma district vegetables – grossing about $5300 to Atlanta.
The California drought is hurting everyone from growers to shippers – and produce truckers – to the consumer, who ultimately is paying more for their food.
Groundwater supplies pumped from wells will make up most of the shortfall in agricultural water caused by the California drought.
A new study says the drought will still result in $810 million in lost crop revenues this year. The study, “Economic Analysis of the 2014 Drought for California Agriculture,” published by the University of California at Davis Center for Watershed Schiences, the study estimated the total statewide economic costs of the drought at $2.2 billion, including the loss of 17,100 seasonal and part time jobs.
Crop values of the state’s fruit and nut trees will decline by $277 million because of the drought, while losses to vegetables and non-tree fruit are estimated at $47 million in 2014.. The drought is expected to decrease cropland in California by 428,000 acres in 2014. Of that total, fruit and nut trees account for 41,000 acres of the total reduction, with vegetables and non tree fruit representing 10,000 acres of idled ground.
The surface water reduction caused by the drought, according to the report, is estimated at 6.6 million acre-feet. The increase in groundwater pumping of water was estimated 5.1 million acre-feet, leaving the net water shortage of 1.6 million acre-feet. Besides crop revenue losses of $810 million, other costs include additional water pumping expenses of $454 million and $203 million in livestock and dairy revenue loss. That totals $1.5 billion in direct costs.