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.

Paying it Forward: Industry Leaders Celebrate at Spencer Gala

Every year in September, leaders in the insurance world celebrate the profession and show their support for the next generation of risk management and insurance professionals. This year, close to 700 executives made their way to the Spencer Educational Foundation’s 9th Annual Gala on Thursday night at the New York Hilton Midtown. Nearly million in donations were accepted at the event, a critical fundraising initiative for the Foundation.

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Proceeds will directly fund grant, scholarship and internship programs for undergraduate and graduate students who are pursuing careers in the field.

“The Gala is a wonderful reminder of just how generous and passionate professionals in this industry are,” said Ron Davis, executive vice president at Zurich and Spencer Educational Foundation chairman. “Tonight we’re celebrating the profession that has afforded us so much by giving back and creating meaningful opportunities for future risk professionals.”

The Gala honored 2017 Spencer Scholars Jayde Lim Ah Tock, a junior from Temple University, and James Pappas, a senior at St. John’s University. “Being a Spencer Scholar has allowed me to focus on my university’s program,” Tock said. “I want to thank the donors for allowing me to pursue something that is so important to me.”

When speaking about the support Spencer provided, Pappas said he is now “confident, optimistic and energized” about his future and knows he is “joining an amazing industry that truly makes a difference.”

Among the industry leaders in attendance were honorees Joseph Tocco, chief executive, north America insurance at XL Catlin, and Michael Rice, chief executive officer at JLT Specialty USA. Both are longtime Spencer supporters and were recognized for their efforts to move the Foundation’s mission forward.

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The night’s festivities concluded with remarks from the honorees whose comments focused on the industry’s talent gap and the aging risk management workforce.

“The world needs our industry and our industry needs to attract and develop new talent,” Rice said. “Spencer is a wonderful conduit that allows us to celebrate this talent and the future of the profession.”

Tocco added, “I’m proud to be in an industry that places so much energy on education. Enlisting the next generation of risk professionals is more imperative now than ever before. We need to make “risk management” students’ first choice and not a profession by accident.

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Students around the world have benefited from Spencer funding. Since its inception, the charitable nonprofit has awarded 970 scholarships totaling about $4 million, and $3.25 million in grants to universities and professional institutions for educational programs and conferences.

Beware of Fire Ants During Hurricane Cleanup

While Texas, Florida and other states dry out from the trillions of gallons of water dumped by Hurricanes Harvey and Irene, there is much to be done and many hazards to watch out for when clearing trees and removing soggy remains from homes and offices.

While cleaning up outdoors, people should keep in mind that many animals are also displaced. These include 20 species of snakes (in Texas), alligators, deer and raccoons, according to the Washington Post.

What they may not be on the lookout for, however, are floating rafts of fire ants, which have a painful, itchy sting, Smithsonian reported. The ants, which send some 25,000 people to the hospital each year, can be found in a number of states, including Texas, Florida, Alabama, Mississippi, and California. They have a way of coping with large amounts of water by clinging to each other and forming floating rafts that can contain 500,000 or more fire ants.
Photo: ScienceNews

These rafts are actually floating colonies protecting the queen, which is in the middle. They can survive for weeks until they find a dry surface—any dry surface.

According to Popular Science:

Normal ants bite and then spray acid on the new wound, but fire ants are much worse. They bite, hold on, and inject a venom containing 46 different proteins, including poisons that sometimes affect the nervous system. They also have a more brutal attack pattern than many social insects. If you knock over a beehive, not all the bees will come after you—most colonies have a few dedicated warriors to protect the clan. When fire ants are disturbed, however, they all attack. About one in every hundred people will have a full-body response to the stings, such as an allergic reaction or even hallucinations.

As Eric Chaney at the Weather Channel warns, the ants can remain a problem even after the floodwaters recede and it is easy to accidently happen upon them, hunkered down amidst debris piles. According to the Imported Fire Ant Research and Management Project, “Laundry piles are convenient places that present lots of tunnels for the ants. They may be attracted to moisture or food residue or oils on soiled clothing. Often, reports of ants in laundry occur following a flood.”

Those venturing into flood waters are advised to wear rubber boots, cuffed gloves and protective rain gear to keep ants off their skin. Popular Science recommends spraying ant rafts with their kryptonite—soapy water—which can cause them to sink.

RIMS Membership Has a Say in COSO’s New ERM Framework

When Risk & Insurance Management Society (RIMS) members use the new ERM framework published Sept. 6 by the Committee of Sponsoring Organizations of theTreadway Commission (COSO), they may recognize their own ideas prominently displayed. Carol Fox, RIMS vice president of strategic initiatives announced the call for public comment on Risk Management Monitor in June 2016. She said feedback from the industry, and particularly RIMS members, is reflected in COSO’s ERM Framework: Integrating with Strategy and Performance.

“RIMS members took advantage of the unique opportunity to influence one of the industry’s major guidance documents. For several weeks, members collaborated and drafted a response, which was publicly available through the end of last year,” said Fox, who participated on the project’s advisory council. “We were very appreciative that COSO reached out to RIMS and other professional associations, whose input strengthened the content, ideas and approaches featured in Integrating with Strategy and Performance.

A summary of the public comment feedback includes:

  • More than 200 responses–double that of the internal control update
  • Over 70% of responses from individuals
  • Over 50% of participation outside of North America
  • Almost 50% had affiliations beyond COSO memberships
  • Almost 50% of respondents had 10 or more years of risk management experience
  • Positive ratings outnumbered negative ratings by 4.5 to 1

The new publication serves as an update to 2004’s Enterprise Risk Management – Integrated Framework, which is internationally regarded as the standard for applied risk management frameworks. Developed by PwC under the direction of the COSO Board, its simple, five-component structure considers various viewpoints and operating structures while highlighting the importance of enterprise risk management in strategic planning. It also emphasizes embedding ERM throughout an organization, as risk influences strategy and performance throughout the organization.

“The complexity of risk has changed, new risks have emerged, and both boards and executives have enhanced their awareness and oversight of enterprise risk management while asking for improved risk reporting,” said COSO Chair Robert B. Hirth Jr. “Our overall goal is to continue to encourage a risk-conscious culture.”

Enterprise Risk Management: Integrating with Strategy and Performance is available in printed form, e-book, on-line subscription and pdf licensing for large organizations, accounting and consulting firms. Additionally, COSO is planning for the framework to be translated into several languages, including Chinese, Japanese, Spanish and French.

Visit www.coso.org for purchase information and for a link to the framework’s executive summary.