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As Floodwater Heads To Gulf, Ag Flood Damage Estimate Widens To $175 Million
FAYETTEVILLE, ARK.
As floodwater from late April’s inundation spread southward through Arkansas, its destructive reach expanded to 977,800 acres of farmland and the dollar value of its damage has grown so far to about $175 million, according to an updated estimate released Tuesday by the University of Arkansas System Division of Agriculture.
The $175 million is a midpoint in an estimated range from $140 million to $210 million that not only includes the value of the cropland damaged, but also the effects of reduced processing.
The estimate was calculated by Eric Wailes, distinguished professor of agricultural economics and agribusiness for the University of Arkansas System Division of Agriculture, based on information compiled the previous week by a Cooperative Extension Service team led by Jarrod Hardke, extension rice agronomist for the Division of Agriculture, working with county extension agents and the Farm Service Agency.
New inclusions
The newest damage estimate includes sorghum and wheat, which were not counted in the estimate released May 5, that pegged the damage at $64.5 million.
“These numbers now include the estimated value of losses associated with delays in planting, changes input costs; the input costs associated with a second round of planting and the costs associated with processing,” Hardke said. “It includes everything that’s associated with a do-over and a delayed do-over for farmers.”
The estimate includes only row crop losses. It does not include damage to livestock and structures such as grain bins. “We also should have some equipment, irrigation, and infrastructure numbers by the next estimate,” said Vic Ford, interim associate director-agriculture-extension for the Division of Agriculture.
Extension agents identified storm-damaged cropland in 21 of the state’s 75 counties: Clay, Craighead, Crittenden, Cross, Desha, Greene, Independence, Jackson, Jefferson, Lawrence, Lee, Lonoke, Mississippi, Phillips, Poinsett, Prairie, Pulaski, Randolph, St. Francis, White and Woodruff. There were 17 counties in the original estimate. New this time were Crittenden, Independence, Jefferson and Lee counties.
Poinsett County had the highest number of damaged acres, estimated at 194,900, followed by Greene County, 138,000 acres; Prairie County, 125,000 acres; Lawrence County, 80,000 acres; and Randolph with 60,000 acres.
Rice was still the most hard-hit with 181,450 acres lost, up from the 156,000 acres in the initial estimate. Soybeans were next at 121,800 acres. Corn was pegged at 40,150 acres, cotton at 13,000 acres, wheat at 4,250 acres, and sorghum at 1,000 acres.
Third time
2017’s flooding marks the third time the last decade Wailes has had to analyze the economic impact of flooding in northeastern Arkansas, the other times being 2011 and last summer.
“The 2011 event was termed a ‘once in a lifetime’ event,” he said. “Unfortunately, the flooding in 2017 has proven otherwise.”
The Division of Agriculture estimated the 2011 damage to Arkansas agriculture at $335 million. And like this year, the state's rice crop took the biggest hit in 2011, the $141.87 million in damage to rice made up nearly half of the $335 million net loss. (See: http://bit.ly/2rjbyAC)
“While there are many similarities, a key difference in 2017 was that planting was earlier than in 2011,” Wailes said. “This means that farmers had already committed time and resources to getting the crops in the fields. Whether the 2017 event will generate losses as large as in 2011 depends on how quickly the flood water drains and how quickly farmers can replant.”
However, the Division of Agriculture is expecting the dollar figures from the April 28-30 storms to rise still higher.
“The higher numbers we have in this follow-up estimate are due to better information. As the water receded in some locations farmers, extension agents and agronomists and others were able to get into the fields and closely examine damage,” said Mark Cochran, vice president-agriculture for the University of Arkansas System and head of the Division of Agriculture.
“Even so, we expect the numbers may continue to rise as the bulge of floodwaters continues to head south, engulfing more acreage and with more rain events in the forecast,” he said. “The figure may wind up being closer to the $210 million end of the estimate range.”
Many crops will also be subject to water-related diseases and while they might be infected today, an assessment of any disease impact can’t be made for several weeks.
On Tuesday, major flooding was reported at Des Arc and Clarendon on the White River and Osceola on the Mississippi. Moderate flooding was reported at Georgetown on the White and on the Mississippi River at Arkansas City, Arkansas, and Tunica and Greenville, Mississippi. Minor flooding was reported along the Black River at Pocahontas and Black Rock, and on the White at Augusta and Newport.
Financial fallout for growers
Farmers have wrestled with razor-thin profit margins for years. However, the cumulative effects of a third weather-related blow in a six-year span are adding up to staggering financial difficulties for some growers.
“While some farmers facing these losses might take advantage of assistance in the form of low-interest loans, many of the most affected farmers probably cannot service more debt even at near-zero interest rates,” said Greg Cole, chief executive officer of AgHeritage Farm Credit. “So grants may be effective in keeping these farms financially solvent.
“This is particularly true with the late mandated replant date for rice crop insurance which is so late that expected yields for a late planting with the current market prices will be unlikely prove profitable,” Cole said.
On top of their troubles is a Farm Bill-mandated replant deadline for rice that many believe is untenable. (See: http://bit.ly/2razQNY). Arkansas’ congressional delegation and Gov. Asa Hutchinson have asked Agriculture Secretary Sonny Perdue to mitigate the impact of the replant provisions by:
Providing flexibility in enforcement of “ability to replant” provisions
Using a county-by-county approach for the required replanting window … “instead of imposing a one-size-fits-all standard.”
Demonstrating “considerable deference to producers regarding the factors and circumstances that impact the viability of replanting on their individual operations.”
Without action, “Excessive, additional financial hardship will be placed upon producers already facing significant challenges if this flexibility is not provided,” Hutchinson said.
See the delegation’s letter to Perdue, and the governor’s letter.
The sentiment was echoed by the Arkansas Rice Federation.
“Arkansas farmers have been hit extraordinarily hard by the spring floods of 2017,” said Ben Noble, executive director of the Arkansas Rice Federation. “Congress has been pushing farmers towards crop insurance for several years and Arkansas farmers have done their part by obtaining coverage.”
Noble said that existing risk management programs available from USDA’s Risk Management Agency weren’t tailored for Southern commodities.
“Crop insurance alone won’t be sufficient for many of the impacted Arkansas farmers,” he said. “Congress and USDA need to seriously consider disaster grants to address this immediate need, and pursue significant crop insurance reform for the long term.”
On Tuesday in Washington, Perdue visited with a delegation from USA Rice to discuss flooding, insurance and trade.
Long-term costs
The latest estimate does not include “items such as additional expensive forms of land preparation,” Hardke said, which would encompass removal of soil, gravel and other debris that flooding washed onto a farm as well re-contouring pockmarked land scoured by fast moving waters.
“If you go into Randolph County and you find a pile of soil, that means there’s a hole somewhere else. A place that used to be a highway and is a sandbar now – that soil came from somewhere,” he said. “In some ways, the effects are incalculable. There’s no adequate way to account for the potential future losses in production and value associated with this event over the next 10 years. But it will be there.” ∆
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