Posts Tagged “California drought”
California’s ongoing drought continues to hit price tags in grocery stores across the country including fresh fruits and vegetable prices, which will go up an estimated 6 percent in the coming months, the federal government said recently.
“You’re probably going to see the biggest produce price increases on avocados, berries, broccoli, grapes, lettuce, melons, peppers, tomatoes and packaged salads,” said Timothy Richards, a chair at the Morrison School of Agribusiness at Arizona State University.
In its monthly report on the food price outlook, the U.S. Department of Agriculture said the price of fruit and vegetables will continue to rise.
The USDA’s Economic Research Service reported that the California drought has the potential to increase food price inflation above the historical average in coming years as farmers continue to battle for water in the summer months.
Although the department is sticking with its overall forecast that U.S. food prices will increase by up to 3.5% this year over last, it cautioned that the cost of meat, dairy, fruit and vegetables will jump.
California farmers produce about half of the nation’s fruits and vegetables, and most of its high-value crops such as broccoli, tomatoes and artichokes.
But the rising cost of water has forced farmers to idle about 500,000 acres of land and produce less, making certain foods more expensive.
Fresh produce has increased the most and that’s a direct result of the California drought,” said Annemarie Kuhns, an economist with the USDA. Almost 70 percent of the nation’s lettuce is grown in California.
The department now expects 2014 U.S. fresh fruit prices to jump by up to 6 percent, up from its May projection of about 4 percent. A devastating citrus disease in Florida also sent citrus prices up 22.5 percent this year.
Consumers will also see a bump in dairy prices due to increased demand.
There seems to be very few examples of bumper, much less record setting produce crops around the country this spring and summer. That will probably translate into produce freight rates not being exceptional – at least for this time of year. Typically, the heaviest volume and highest rates hit sometime in May and continue through June and July.
For example, California avocados, lettuce, many other vegetables and stone fruit are not expected to set any shipping records. You’ll also see the results of this lower volume translating into significantly higher retail prices at your local supermarket.
Other shipping areas around the country expect small volumes of produce to be shipped, due to weather factors, ranging from Texas to Michigan and the Southestern U.S.
There have been produce industry estimates ranging from a half-million to 1 million acres of agricultural land likely to be affected by the current California drought, with between 10 and 20 percent of the supply of certain crops possibly lost. California grows and ships around 50 percent of the nation’s fresh fruits and vegetables.
One study estimates the following possible price increases due to the drought: avocados, up 17 to 35 cents to as much as $1.60 each; berries, up 21 to 43 cents to as much as $3.46 per clamshell; broccoli, up 20 to 40 cents to a possible $2.18 per pound;. grapes, a rise of 26 to 50 cents to a possible $2.93 per pound; lettuce, could rise 31 to 62 cents to as much as $2.44 per head; packaged salad, up 17 to 34 cents to a possible $3.03 per bag; peppers, up 18 to 35 cents to a possible $2.48 per pound; and tomatoes, likely to rise 22 to 45 cents to a possible $2.84 per pound.
“We predict the increased prices will change consumer purchasing behavior,” Sherry Frey, vice president of Nielsen Perishables Group, said in a release. Frey said that certain consumers — young consumers of avocados, for example — will be more heavily affected by the price increases.
All of these factor don’t even take into consideration mounting rules and regulations by state and federal governments on the trucking industry. The hours-of-service rules implemented last year alone will undoubtedly reduce the number round trips. There is still a push for electronic on board devices, and the feds want higher insurance requirements for truckers — and the list goes on and on.
So will there be any $10,000 gross freight rates on coast-to-coast produce hauls this year? Probably not, or at the best very few. But no one really knows for sure.