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Adding up the flood damage

Jeff Caldwell 06/20/2011 @ 3:54pm Agricultural content creator and marketer.

Earlier this spring, federal officials authorized the breaching of a levee along the Mississippi River between southeastern Missouri and southwestern Illinois.

Now, the value of the crops that were just starting their growing season on the acres that were eventually flooded out by the encroaching river after the levee was blown is being pegged at more than $85 million, according to a report requested by Rep. Jo Ann Emerson (R-Cape Girardeau) and conducted by the University of Missouri's Food and Agricultural Policy Research Institute (FAPRI).

The area flooded when the levee broke makes up about 133,000 acres between Birds Point and New Madrid, Missouri. The breach was carried out on the orders of the Army Corps of Engineers in an effort to save the town of Cairo, Illinois -- on the confluence of the Mississippi and Ohio Rivers -- from flooding.

According to FAPRI economist Scott Brown, the economic loss goes up to $156.7 million when "broader economic changes are applied," according to a FAPRI report.

"FAPRI economists estimated current-year plantings and potential yields based on USDA records of recent-year plantings. The acreage was adjusted by current FAPRI baseline projections for 2011," according to the report. "Prices were based on the June 2011 USDA midpoint estimates for the 2011-12 crop year. That resulted in a corn price of $6.75 per bushel after normal Bootheel crop basis was included."

Variable costs for the crop alone were estimated at $15.7 million for this year's crop, adds University of Missouri Extension ag business specialist David Reinbott.

Crop insurance will cover many of the losses, and other programs will pick up shares of the tab as well, though much of that money won't reach farmers' hands until late next year, Brown adds.

"The USDA Supplemental Revenue Assistance Payment Program (SURE) payments were included as well. Crop insurance covers $15.9 million and disaster payments another $2.2 million. When crop variable expenses and returns from government payments are included, the 2011 crop loss totals $42.6 million to farmers in the floodway," according to the FAPRI report. The broader impact to the region was implied by using a time-proven model called IMPLAN. The model adds direct effects plus indirect and induced effects. Indirect losses measure the lost business such as from farm supply purchases. Induced losses measure how lack of farm income affects suppliers of consumer goods and professional services in the area."

The full toll on the specific area won't be known until later this year, Brown adds, and the potential detrimental effects to the area's crops in the future wasn't factored in to the FAPRI study.

“Economic estimates in this report may need adjustments as the year unfolds. The damage will be felt for years to come,” Brown says. “However, that was not part of the current study.”

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