Wacky weather driving food costs out of whack

The West still is on drought alert, the South is drier than usual and the East and Midwest are having a pretty wet summer so far. And while farmers may be losing sleep over the weather, it doesn’t seem to be impacting wholesale fruit and vegetable prices too much—yet. As we reported in the July issue of Restaurant Business [see "Cultivating a backup plan"], the California Department of Agriculture expects price increases to be under 2 percent through the end of 2015, even though drought-ridden California grows more than half of all U.S. produce.

The California drought is reducing crop acreage, but most of that reduction is occurring in the Central Valley where water usage has been cut by 33 percent. This area is planted primarily with forage, grain and other field crops, says Daniel Sumner, professor of agricultural and resource economics at UC-Davis. Fresh vegetables, berries, avocados and higher-priced wine grapes are planted in the Central Coast, where water restrictions are less severe. And since these fruit and vegetable crops are much more profitable, farmers tend to use whatever water they can get to make sure they flourish, Sumner says.

That said, there are specific crops that will see more increases than others, according to Sumner. The lower supply and higher cost of forage crops is impacting the dairy industry, and he estimates California milk production will decrease by 5 percent this year, pushing cheese prices up by 1 percent.

California-grown lettuce is also projected to be more expensive. There’s a 3 percent decrease in supply, which can potentially cause a 1.5 percent price increase.

Rice production seems to be suffering the most. Although California grows considerably less than other countries in the world and focuses on specialized rice crops, the quantity could be 33 percent lower, causing the price to jump by an estimated 10 percent.

Other prices fluctuate weekly and increases are more temporary, based on availability. The first peaches picked this season in Georgia were smaller than usual and about 10 percent higher in cost compared to last summer, according to the USDA, but as the season progresses, prices should come down. Early July also saw a tightening of bell pepper supplies, temporarily pushing the price up about 20 percent over 2014, according to industry publication The Packer. The hot, dry weather in California decreased quantity and the cool, damp weather in Eastern growing regions delayed ripening, but growers and shippers expect the shortage to be over by the end of the month.

Meanwhile, price may not be the only concern of some producers and chefs—the weather can also wreak havoc on flavor. Cows that can’t feed on moist green grass produce milk that may give an off taste to a California artisanal cheese. On the other hand, when less watering produces a smaller tomato or plum, it can work in its favor, concentrating the flavor and making it more intense.

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