Consumers expected the California drought to affect the economics of fresh fruits and vegetables at retail in the U.S. However, the costs associated with the drought were balanced with low fuel prices, a strong U.S. dollar, food imports and low indirect costs. These costs were key in keeping retail prices flat. Comparing the 2015 average price level with the 2016, the CPI for food-at-home was down 1.2 percent. Although the outlook for California production of fruits and vegetables in 2017 is up, experts recommend that it is best to prepare for another dry season as expectations for El Niño and La Niña did not meet forecasted outlooks. California’s agri-business and the price consumer’s pay for fruits and vegetable grown in California will depend on precipitation, availability of groundwater, adjustments of crops and the overall U.S. economy and policies under President Trump.
The six-year drought in California has not affected the retail prices of fruit and vegetables in the U.S., since retail fruit and vegetables have a strong relationship with farm commodity prices. Farm and agribusiness represent 40.2 cents of every dollar spent on fresh fruit — more than other retail components. This makes the cost of growing fruits and vegetables a considerable cost component that could increase by the effects of a drought depending on the severity of the drought, farmers’ decisions on what to plant and yields.
California represents 70 percent of the total nut and fruit farm value and 55 percent of farm value for vegetables in the U.S. Factors that affect production such as the scarcity or increase in cost of agricultural inputs have a direct relationship to the cost of end product. Predictions for the end of 2017 show 40 percent below average probability of precipitation in northern California. Temperatures will be above average in 2017.