Relentless floods continue to shower the state of California, leaving acre upon acre of farmland drenched under water. Since Dec-22, heavy rainfall, snowfall, and strong winds have swept across the state in waves. During January 2023, the state received 32 trillion gallons of rain, close to a year's allocation in only three weeks, followed by waves of atmospheric river storms in the months that followed. Initially, the rain was received well, as the state was recovering from three of the driest years on record. However, the incessant nature of the downpour has drowned any hopes of a productive year for farmers.
The impact of the floods is far-reaching, as California is responsible for more than half of the country's fruit and vegetable production. The state's Central Coast, America's Salad Bowl, has been the most affected. For example, farming communities in Salinas and the Pajaro Valley, located in Monterey County, the centre of the salad bowl, have disappeared under feet of water. According to the California Department of Food and Agriculture, Monterey County is the fourth leading agricultural producer in the state, responsible for over USD 4 billion in annual revenue in 2022, primarily through lettuce, strawberry, and broccoli.
According to the Monterey Farm County Bureau, the saturated soil has pushed back strawberry and lettuce planting. The impact of the flooding has also led to a two-week delay in processed tomato planting in Yolo, Kings, Merced, San Joaquin, and Fresno County, the top-producing region. As a result, farmers may need to recalculate harvesting schedules, which previously ran from June to October. Stormy weather during the almond bloom also resulted in low bee flight hours and hampered pollination, hindering nut development, and could lead to poor quality and smaller almonds.
On a global level, the floods could impact the global supply of strawberries, lettuce, tomatoes, and almonds, given that the US is a leading supplier of all these products, with much of the production concentrated in California. As a result, tomato paste exports from the US may take a hit if production falls significantly. This would leave US exporters unable to capitalize on the production woes of leading global suppliers such as Spain, Italy, and Portugal, who are expected to produce significantly smaller quantities due to the prolonged drought in the EU. Leading markets such as Canada, Mexico, Japan, and South Korea may need to look at alternative suppliers such as Chile and China, where processing tomato production is expected to reach 1.15 million mt and 7.3 million mt in 2023, respectively. Regarding strawberries and lettuce, Mexico could be the largest beneficiary as the North American country will look to increase export amount to the US, filling the supply gap and shipping more volumes to Canada, the US' leading market.
The production woes caused by the floods are likely to result in elevated food prices in the coming months. Already export prices for tomato paste from the US are up to USD 2,036 per mt in April, a 22.1% YoY increase, while canned tomato prices are up 6.1% YoY at USD 886 per mt. A continued surge in tomato paste prices could also lead to an uptick in the price of pizza, given that other ingredients such as wheat flour, oil, and butter have also experienced a bullish trend in recent months. Winter storms in California affected the production of fresh-headed broccoli and delayed harvest. Due to supply disruptions, the wholesale price of fresh broccoli in the US soared 34.17% WoW up to USD 2.12/kg on the 6th of March. Continued weather disruptions have continued to push broccoli prices up in April. As a result, in Los Angeles, California, fresh-headed broccoli rose to USD 7.14/kg on the 10th of April from USD 3.40/kg on the 20th of February, a 110% increase.
Tridge expects the production outlook of the affected crops to remain bleak throughout the year as more showers are forecast to fall on Central California between April and May. Heavy snow is also expected to fall on the coastal mountains, and a significantly large blanket of snow in the Sierra Nevada, 236% larger than normal, is beginning to melt. Prices of fresh headed broccoli, lettuce, strawberries, tomato paste, and almonds are expected to gain in the coming month, as production forecasts in May are set to reflect the extent of damage caused by the floods.
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