High Water, Low Prices

While total crop losses from the flooding of the Mississippi River are now expected to top $3.5 billion, it’s unlikely to cost most Southern California grocery shoppers more than a few pennies.

Damage to farmland along the river has been severe, but most of it is planted with soybean, feed corn and alfalfa--crops that wind up being eaten by animals, not by humans.

While that may have a long-term impact on meat prices, it is unlikely to affect grocery store prices in the near-term--certainly not on the scale of Hurricane Andrew (which wiped out much of Central Florida’s fruit and vegetable crops) or even of California’s winter rains last year (which delayed planting of many “table” crops, creating shortages through the spring).

The same is not true on the East Coast--particularly in New York. But that has more to do with the flood’s impact on highways and railroads than on wet fields. Because transportation through the middle Mississippi River valley is precarious, shipping costs have skyrocketed--pushing vegetable prices with it.

Last week, a carton of iceberg lettuce from Salinas that was selling wholesale for roughly $10 here in Los Angeles cost $30 in New York. Those prices have stabilized somewhat by now, but lettuce prices in New York are still in the $17 to $18 a carton range.

As far as the effect on meat prices is concerned, the picture is muddy. Theoretically, if feed prices go up, farmers will either raise meat prices to cover the cost, or “shrink” their herds, putting more meat on the market and lowering prices.

With flood waters still rising, no one is laying any bets on which way the market will go just yet. If the commodities markets are any clue, though, meat prices are up slightly.