Why Farmers Getting More Water Won't Lower Produce Prices

Thanks to a historically wet winter, Central Valley farmers south of the Sacramento-San Joaquin Delta got some long-awaited good news this week from federal water managers. For the first time in more than a decade, they will receive their full allotment of groundwater from the Central Valley Project.

It's a remarkable turnaround from last year, when farmers got only a 5 percent allotment, or even earlier this year, when they got 65 percent.

But don't expect more water to trickle down to lower prices in your local produce aisle.

"You won’t notice," said Daniel Sumner, a professor of agricultural economics at UC Davis.

That’s because even during the driest days of the drought, farmers kept growing the kinds of high-value crops consumers buy in the grocery store, even if it meant pumping groundwater, he said.

"The crops that they make sure to keep the water on for are carrots, strawberries and things like that, that are high-revenue per drop of water," said Sumner.

Meanwhile, farmers grew fewer low-value crops, like alfalfa and corn silage, which feed cows.

"You never move a drop of water to alfalfa if you can keep on strawberries," said Sumner.

Now that farmers have their water back, it’s not like they can suddenly switch to avocado trees, which take 5-13 years to bear fruit.

Hence, they'll grow more feed. Down the line that could mean slightly lower milk prices. However, Sumner points out that most milk in California actually gets turned into cheese, which is often exported, or dry milk power, which goes into all sort of products, such as Balance Bars and PowerBars.

"It may well be over a year or two, if we keep having plenty of water, that I could show the sports bar you eat is a nickel cheaper out of the $2.50 price due to this water allocation," said Sumner.