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The Drought Not Likely To Cause Higher Grocery Bills

Skakerman / Flickr
 

Skakerman / Flickr

Even though the price of water is skyrocketing in California and experts predict farmers will fallow about a million acres this year, your grocery bill is not likely to go up. 

California farmers are making choices to insulate consumers from the drought. Daniel Sumner, an economist at UC Davis, offers an example illustrating what's happening.

"A farmer that grows pistachios and cotton has left his cotton land idle and taken the water that he might have otherwise used on cotton and shifted it to the pistachios to keep those trees alive, to keep the pistachios coming," says Sumner. 

Because cotton is grown in many places the cotton supply doesn't change, and California continues to supply pistachios, which are unique to the San Joaquin Valley.

In other words, the drought isn't changing supply and demand overall.  

Plus, water prices are a relatively small portion of overall costs. Labor, packaging and marketing are much more substantial factors. 

Last year the U.S. Dept. of Agriculture reported that food prices increased by 2 to 3 percent.

“Was a few tenths of percent of that due to the California drought?" says Sumner. "Yeah, probably so."

Sumner says eventually produce prices could rise if the drought stretches on. But, consumers won't likely see any up-ticks for several years.