California Drought Drives Up Prices of Grocery Items as Crop Production Declines

The ongoing California drought is expected to impact the prices of grocery items and drive food inflation even higher for consumers. The dry spell has been affecting the state's crop production and causing it to decline.

As of last week, according to the US Drought Monitor, 94% of California was classified as having a severe, extreme, or exceptional drought. Early in July, such drought conditions were present in nearly 97.5% of the Golden State. The US Department of Agriculture (USDA), the University of Nebraska-Lincoln, and the National Oceanic and Atmospheric Administration collaborated to create the US Drought Monitor.

California produces more than one-third of the nation's vegetables and three-quarters of its fruits and nuts, according to the California Department of Food and Agriculture. According to data from the USDA, the state produced 4.192 million hundredweight (cwt), 224.01 million cwt, and 19.026 million cwt of garlic, tomatoes, and onions respectively in 2021.

Tomato Production Crisis

According to a USDA report published in late August, California's drought and high temperatures have made it challenging for tomato growers to supply the market. According to the report, the department decreased by 2% from the previous year the production estimates for processing tomatoes in California. This is the one used for tomato-based products such as ketchup and pasta sauce.

The company Kraft Heinz, which makes ketchup, Classico pasta sauces, and other food items, asserted that the California tomato crop this season has led to overall lower yields.

However, they do not anticipate a service gap for any Kraft Heinz products where tomatoes are a key ingredient, according to the company statement. To keep production, the cross-functional team of the company developed a plan that identified alternative tomato-growing regions and a method for creating distinctive tomato seeds with enhanced climatic and water efficiency.

Other crops, like garlic and onion, are also anticipated to be impacted in addition to tomatoes.

According to Don Cameron, the president of the California State Board of Food and Agriculture, the product's cost to the processors-the canners, the buyers downstream-has increased by 25% as a result of this summer's harvest.

Price Increase

Cameron continued by saying that a price increase of another 25% had already been negotiated for onions and garlic for 2023.

The anticipated price increases for important crops could contribute to consumer inflation, which is already close to a 40-year high, given the effects of California's drought on crops such as tomatoes, onions, and garlic.

The Consumer Price Index (CPI) for August in the United States increased by 0.1% from July and 8.3% from the previous year. Mid-September saw a report from the Department of Labor. The cost of food increased by 11.4% annually and 0.8% monthly, with the cost of groceries increasing by 13.5% annually, according to the Labor Department.

Fruits and vegetables are now costing 9.4% more than they did a year ago and 0.5% more than in July. According to the Labor Department, tomato prices increased 2.3% from July to August despite declining 0.2% from a year earlier. The price of lettuce has increased by 10.7% annually and 0.8% monthly.

On Thursday, the Bureau of Labor Statistics is expected to publish fresh CPI figures, Fox10 Phoenix reports.