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Hurricane Flooding Affecting Agricultural Supply Chains

The trillions of gallons of water dumped by Hurricane Harvey on Texas and Louisiana and Hurricane Irma in Florida have created major problems for agricultural producers in these states. The damage is expected to affect supply chains in for businesses including grocery chains, restaurants and livestock ranches as massive rainfall and flooding have interrupted harvesting cycles for crops like wheat, rice, corn and citrus fruits.

Short-term economic losses are already being estimated, while concerns persist about the storm’s long-term effect on crops, soil and machinery.

According to the United States Department of Agriculture’s (USDA) Economic Research Service, Louisiana and Texas are respectively the third and fifth-largest rice producers in the United States. While Louisiana planted almost 400,000 acres of rice this year, LSU AgCenter extension rice specialist Dustin Harrell said a recent survey revealed that only about 10,000 acres of first-crop rice remains left for harvest in south Louisiana. “The big unknown at the moment is the ratoon rice in that area,” Harrell said.

Ratoon rice is a staple for many companies which grows from the remnants of what has already been harvested. “[It’s] very important economically and it, too, can be lost if the ratoon stubble remains submerged for several days.”

For Texas growers, some experts estimate that a substantial portion of their rice crop is completely unusable. “I estimate 80% of the Texas rice crop (170,000 acres) was cut before the storm hit and the remainder is totally lost. Rain normally makes grain, but this is so much more than rain,” said Dwight Roberts, president and CEO of the U.S. Rice Producers Association located in Houston. “[As of Aug. 29] it’s hard to really even know the condition of harvested rice. We’ve got broken communication, no electricity for some areas, and flooded storage in places. There are so many unknowns.”

In a statement issued by the Food and Drug Administration (FDA) on Sept. 14, commissioner Scott Gottlieb acknowledged that rice harvested following Harvey faces risk of contamination. He said steps are being taken to prevent affected rice from being passed on to consumers or animals that could consume these crops, since broken grain can be used for pet food. He made particular mention of the Texas rice crop, saying that so far the agency had “not issued a ban on rice or any other food crops,” adding that rice grown in normal conditions and rice that has not been exposed to contaminated floodwaters may enter commerce. “Also, rice and other crops that were harvested and stored safely before storms hit should not be considered impacted by these events,” he said. 

The storms affected another key commodity: citrus fruits. The USDA ranks Florida and Texas as the respective first- and third-largest producers of oranges and grapefruits, and the storms took a bite out of their crops as well. Florida’s grapefruit harvest was already estimated to be the lowest in 50 years, with growers and experts expecting near-35% percent losses in the top-producing districts. According to USA Today, specific varieties of oranges like navel and Valencia might see a 25-to-35% loss.

“That puts every grower on the East Coast in red ink” for this year, said Andy Taylor, senior vice president and chief financial officer for the world’s largest grapefruit processer, Vero Beach-based Peace River Citrus Products Inc. “Efforts to salvage some of that and get it processed into juice,” however, are unlikely to save even 10% of the fruit dropped, Taylor added.

During his press conference, Gottlieb said the FDA has dispatched experts to work with state regulators and directly with producers to address questions and concerns about mold and other contaminants.

He also recognized the need to get boots on the ground in order to assess the quality of the crops, “or else crops that might be safe—because they were not exposed to contaminated floodwaters—could age past their point of use.”

The FDA distributed resource guides in reaction to the storms. For more general information on evaluating the safety of food and animal food crops exposed to flood waters, visit here. A QA on crops harvested from flooded fields intended for animal food can be found here.

Drought Claiming California Crops

While many California farmers are taking a wait-and-see approach regarding future rainfall, some almond growers are moving ahead with the removal of mature trees. But much more is at risk, including jobs and agricultural products for the rest of the country.

California grows about half of all U.S. fruits and vegetables, mostly in the Central Valley region. It also ranks as the top farm state by annual value of agricultural products. Crops exclusive to California are almonds, dates, figs, grapes for raisins, pomegranates, olives, peaches, pistachios, plums, rice, walnuts, kiwi fruit and clover seed.

In January, Gov. Jerry Brown declared a drought emergency, and this month President Obama announced relief aid for California farmers and ranchers. Because of the severity of the ongoing drought, the U.S. Bureau of Reclamation as well as the State Water Project said there would be no water for Central Valley farmers and ranchers. According to the California Farm Water Coalition, it is expected that about 2 million acres in the San Joaquin Valley will receive no water this year.

“We estimate that more than 500,000 acres of farmland will be idled this year due to water supply shortages,” Mike Wade, executive director of the California Farm Water Coalition said in a statement. He added that agricultural water supply shortages “harm more than just the farms that produce hundreds of varieties of food, fiber and nursery products. Unemployment may hit 15,000 seasonal and full time agricultural workers if this year’s drought has the kind of impact on the economy that occurred in 2009.

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Water shortages then led to idling of 269,000 acres and over 7,400 workers, about half of the expected impact of this year’s drought.

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       Graphics/California Farm Water Coalition

Barry Baker of Baker Farming Company, which normally grows 5,000 acres of almonds, is one of the growers who is removing trees— 20% of them. The Associated Press reported that Baker calculated that before the summer almond harvest he would need to spend $2.5 million. That includes irrigating orchards with scarce, expensive water and paying to have the trees pruned and sprayed. He would also need to have bee hives brought in to pollinate the blossoms at a cost of nearly 0 an acre.
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Not knowing whether there will be any relief, he made the decision to go ahead and remove the trees.

Once removed, the trees are being turned into wood chips and taken to power plants for bio fuel. Tim Lynch of Agra Marketing Group said power plants in the state currently have almost more wood chips from almond trees than they can handle.

The Agricultural Marketing Resource Center reports that California is the only state producing almonds commercially. The state’s 2012 almond crop totaled 2.0 billion pounds, a 2% drop from the previous year and was valued at $4.3 billion. Per person consumption of almonds in the United States has generally been increasing and reached 1.8 pounds in 2011, according to the Almond Board of California.

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The United States is the largest producer of almonds, harvesting 80% of the world’s crop, followed by the European Union – 27, of which Spain, and Australia each harvest 6%, the organization said.

New Forecasting Method Predicts 75% Chance of El Nino in 2014

There is a 75% chance of an El Niño event in 2014, according to an early warning report published in Proceedings of the National Academy of Sciences (PNAS). The researchers used a new method that uses network analysis to predict weather systems up to a year ahead, instead of the usual six-month maximum of other approaches. The model successfully predicted the absence of El Niño in 2012 and 2013.

El Niño events are characterized by a warmer Pacific Ocean, which results in a disruption to the ocean-atmosphere system. This can lead to warmer temperatures worldwide, droughts in Australia and Southeast Asia, and heavy rain and flooding in parts of the U.S. and South America. If such an event occurred toward the end of 2014, the increased temperatures and drought conditions could persist through 2015.

The researchers suggested that their work might help farmers and government agencies by giving them more time to prepare and to consider investing in flood- or drought-resistant crops.

“Farmers might find it worthwhile to invest in drought- or flood-resistant varieties of crops,” Josef Ludescher and Armin Bunde told Businessweek. “A strong El Niño event in late 2014 can make 2015 a record year for global temperatures.”

The current highest record global temperatures date back to 1998, during the last strong El Niño. Given the continued increases in baseline temperature around the world, an El Niño event this year could lead to the record-breaking heat.

Last week, the U.S. Climate Prediction Center issued a similar warning. While the forecasters expect neutral conditions through the spring, a change in temperatures may “portend warming in the coming months.”

El Nino Phenomenon

Crop Insurance Cuts

A proposal made by the House of Representatives Budget Committee yesterday would cut U.S. farm and crop insurance subsidies by $30 billion over 10 years, which is a much greater reduction than agricultural-state lawmakers suggested previously. Budget chairman Paul Ryan called for the reductions.

Ryan’s plan would reduce “the fixed payments that go to farmers irrespective of price levels” and “reform the open-ended nature of the government’s support for crop insurance so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do.

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The potential effect is two-fold, however. If the proposed budget is passed, there is a strong possibility that there will be no farm bill this year.

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According to Representative Colin Peterson (D-MN), it will essentially guarantee it.

Republican leaders, in attempting to avoid defense cuts, have chosen to “leave farmers and hungry families hurting,” Peterson, the ranking Democrat on the House Agriculture Committee, said in an e-mailed message.

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If a farm bill is not passed this year, Congress would need to approve an extension of the existing farm law or else a 1949 law, which comes with higher costs and limited planting regulations, would go into effect.

Let the partisan debate begin.