3 Things Food Retailers Need To Know About the CA Drought

By: Andrew Harig, Director of Government Relations, Food Marketing Institute

According to the U.S. Drought Monitor, 80 percent of California is currently experiencing “extreme drought” and more than 58 percent of the state is seeing “exceptional drought.” Here’s three things food retails need to know:

Fruit Basket – California leads the nation in production of a number of crops and commodities. From almonds to grapes to nectarines, the state has long been the fruit basket of America. In addition, California is the “sole” U.S. producer (commonly defined as hosting more than 95 percent of domestic production) of a number of commodities including artichokes, olives and pistachios.

Varying Degrees – Although all of California is suffering from some level of drought, the actual impact differs from county to county. This means some local governments are managing water resources better than others and that commodities will be impacted differently. In the end, just like real estate, location will mean everything.

Price Alert on Aisle Four—Economists suggest there could be a ripple effect throughout the store.  For example, what happens to prices for chips given a shortage of avocados or to mixers with a lime shortage?  

Legislation for disaster assistance has been introduced in both chambers of Congress, but has not been addressed this summer. While negotiations to reconcile the House and Senate’s drought-related bills are underway, we don’t expect action until the fall, after elections.   We will continue to monitor the situation for new developments. For more information, please visit our Issue Update.