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Why California's drought hasn't sent food prices soaring


California plays an outsized role in American agriculture. The state grows one-third of the country's vegetables and two-thirds of its fruits and nuts. That includes 99 percent of almonds, 95 percent of broccoli, 90 percent of tomatoes, and 74 percent of lettuce.

So you'd think that the California's four-year drought and severe water crisis would have a devastating impact on our produce.

But that hasn't really happened — certainly not yet. Recently, the US Department of Agriculture reported that US supermarket prices rose just 2.9 percent in 2014, and were only expected to increase 2 to 3 percent in 2015. Those numbers are basically in line with average annual increases over the past 20 years.

What's more, the USDA currently projects that overall fruit and vegetable prices will barely budge in 2015 — despite the severe and ongoing drought in California. So what's going on?

Food prices are affected by a lot more than just farming


Dust rises as a farmer plows a field in Mendota, California, in the state's San Joaquin Valley on March 11, 2009. (Robyn Beck/AFP/Getty Images)

Over at the Los Angeles Times, Russ Parsons lists several factors at play here. A key one is that the cost of growing produce only makes up around 10 percent of the retail price you actually see at the supermarket. There's also transportation, packaging, and distribution, plus various mark-ups.

That means that difficult conditions for farmers won't necessarily send food prices at the grocery store skyrocketing. There could also be countervailing factors at play. For example, oil prices have been falling around the world since last June, which, as the USDA notes, can help cut down on food transportation costs.

In a similar vein, a 2014 study from the University of California, Davis on California's drought pointed out that grocery store prices for nuts, wine grapes, and dairy food "are driven more by market demand than by the drought." As such, that study concluded that California's water crisis wouldn't greatly affect consumer prices across the nation.

Parsons also points out that California's farmers aren't all being equally devastated by the drought. Some agricultural regions of the state, particularly on the coast, have been less affected than areas like the Central Valley. What's more, some farmers facing water shortages have also experienced favorable temperatures and growing conditions — strawberry farmers are one example — which has blunted the impact.

Add it all up, and you get a mixed picture. Carrot prices have risen 48 percent in the last year — but strawberry prices have fallen 8 percent. Asparagus has fallen 7 percent. The vast majority of those fruits and vegetables all come from California. There's no single drought story here.

Farmers are also adapting to drought — though often at a long-term cost

Low water levels are visible at the Los Capitancillos Recharge Ponds on April 3, 2015 in San Jose, California. (Justin Sullivan/Getty Images)

Low water levels are visible at the Los Capitancillos Recharge Ponds on April 3, 2015, in San Jose, California. (Justin Sullivan/Getty Images)

There's also another important angle here. Many of California's farmers have found ways to adapt to water shortages, albeit in ways that could have long-term ramifications.

The one that's gotten a lot of attention is groundwater pumping. The federal government has been cutting back on the amount of water delivered to farmers in the Central Valley, due to lower-than-expected snowfall and runoff from the Sierra Nevada mountains. To compensate, many farmers are pumping the water out of underground aquifers that have accumulated over hundreds of years.

That has helped stave off short-term disaster. The UC Davis study found that, in the Central Valley, groundwater pumping has helped farmers replace about 75 percent of the water they've lost due to cutbacks from reservoirs.

The problem is that those underground aquifers are getting depleted rapidly — and, since they built up over a long period of time, they don't recharge easily. A 2012 study in the Proceedings of the National Academies of Sciences found that the Central Valley's aquifers don't refill completely even during California's "wet" periods (because pumping doesn't totally stop). What's more, in a few areas, groundwater pumping causes the ground to sink permanently, which means they can hold less water in the future.

That means farmers are losing a crucial buffer against both this drought — if it persists — and severe droughts to come. Agriculture is thriving for now. But what about the future? (For its part, the state of California has begun regulating groundwater withdrawals, but rules on sustainability will only be slowly phased in between 2020 and 2040.)

California's drought has been more costly to farmers than to consumers

Of course, just because supermarket prices are staying steady doesn't mean the drought has been completely painless. As that UC Davis study mentioned above noted, farmers have suffered heavy impacts.

That study, which came out in June 2014, estimated that farmers faced direct costs of about $1.5 billion last year — including $1 billion in revenue losses (about 3 percent of the state's agricultural value) and $500 million in additional groundwater pumping costs. There was also a loss of about 17,100 jobs. The costs were particularly high in the Central Valley.

This year, the costs could be even higher. A recent survey by the California Farm Water Coalition estimates that roughly 41 percent of irrigated farmland will lose delivery of at least some surface water in the spring and summer. All told, some 620,000 acres of farmland will likely go fallow, with potential losses to farmers reaching $3 billion or more.

Could things get so bad that eventually consumers at the grocery store notice? It's tough to say. The USDA keeps warning that, at some point, "the ongoing drought in California could have large and lasting effects on fruit, vegetable, dairy, and egg prices." But that hasn't happened yet. For now, it's been a lot more painful for farmers than for food shoppers.

Further reading

-- A guide to California's water crisis — and why it's so hard to fix

-- California's water problems go way deeper than almonds

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