While rains throughout the fall have helped end the drought in Texas and bring relief to a parched California, not all that glitters is gold.
Climatologists and agricultural analysts are crediting a robust El Niño with bringing large amounts of moisture to Mexico and the U.S. West and Southwest in recent weeks, but economists and produce industry officials are warning that while the benefits of good rains are far-reaching, the short-term result is that a warmer-than-usual fall and excessive rains since July have caused serious crop losses or yield reductions in produce regions of both countries.
The result across the produce and food industry and for farmers on both sides of the border is an expected down turn in revenue for this quarter.
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For example, Landec Corporation, a leading developer and marketer of healthy living applications in the food and biomedical markets, has revised its revenue and net income guidance for the fiscal second quarter and fiscal year 2016 due to severe shortages of key produce items caused by unseasonably warm weather during the second quarter ending November 29, 2015.
"During the second quarter of Landec’s fiscal year 2016, Apio, Inc. [a California-based provider of fresh produce and vegetables] has been experiencing produce shortages and increased costs in many of our key vegetables due to very poor yields and quality to the extent never seen before in Apio’s 35-year history," said Molly Hemmeter, Landec’s President and CEO.
“Despite our efforts to meet the increasing demand for our products, there is simply not enough supply from our contracted growers, or for purchase on the open market, to meet demand."
Hemmeter said shortages have been due to unseasonably warm weather and heavy rains and told board members recently that Landec's procurement team has been working to ensure that Apio continues to supply all demand for the company's "Eat Smart" salad kits and vegetable trays, isolating shortages to fresh-cut bagged vegetable products.
"Many experts in the Western vegetable industry have commented that they have never seen vegetables in such short supply, which has led to exorbitant prices and low quality for many crops. Cauliflower has been the most challenging, with market prices reaching a high of $47 a case compared to a typical average price of $15 to $ 21 a case at this time of year," she added.
TEMPORARY PRICE INCREASE
Landec officials say in response to the increased costs for produce, Apio, Inc., initiated a temporary price increase during the month of November on fresh vegetable trays and bags, but did not raise prices on Eat Smart salad kits or green bean products.
"Due to our inability to meet all demand during this time of severe produce shortage, we expect to lose some customers during the second half of fiscal year 2016, which is reflected in our revised guidance. The loss of these customers will have an impact on revenues during the second half of fiscal year 2016 but should not have a material impact on net income in the second half,” added Hemmeter.
While vegetable growers and produce providers in Mexico are concerned over too much rain that has dampened the chance for normal yields on winter vegetables this year, California growers in the central San Joaquin Valley are hoping for more rain throughout the winter. Much of the recent rains fell across southern and central California and has not yet provided major relief to the Valley.
In November the Valley received nearly twice its average rain, but more is needed before anyone is calling it a drought-ending event.
"The conditions for above-normal rain and snow are what we’d call favored but you can’t guarantee anything about climate," Mike Halpert, deputy director of the National Oceanographic and Atmospheric Administration’s Climate Prediction Center in Maryland told the Fresno Bee last week.
While El Niño rains have caused crop losses and smaller yields for many growers in parts of Mexico and the U.S., farmers overall are still looking to a wet winter as a positive development in the long run. Even so, many remain cautious knowing that the weather can be fickle.
"Historically, we characterize the climate in the Southwest and California as long periods of dry punctuated by much shorter periods of wet, and sometimes extreme wet,” said Kevin Werner, with the National Centers for Environmental Information. “Regardless of El Niño or climate change or anything else, the climate tends to be highly variable and tends to see a lot of dry days, dry months or even dry years."
But for now, higher produce prices are a trending result of heavy El Niño-driven rains, but the long range benefit could be improved water conditions in areas that have long suffered from recent or continuing drought.