Katrina's agriculture costs will top $2 billion

updated 6:32 p.m. ET Sept. 2, 2005

WASHINGTON - Hurricane damages to farm-related industries will cost more than $2 billion and could increase food prices, according to estimates by American Farm Bureau Federation.

The impact is rippling throughout agriculture. Hurricane Katrina flattened and drenched southern crops such as sugar cane and cotton. Its winds destroyed chicken houses and the flocks inside.

Those losses “may be the tip of the iceberg,” said Terry Francl, economist for Farm Bureau, which is the nation’s largest general farm organization.

Farm Bureau said a conservative estimate is that direct damages to crops and livestock will rise above $1 billion. Indirect costs, such as increased shipping rates and fuel prices, also will reach at least $1 billion, the group said.

Food prices could rise slightly, mainly because of higher energy costs.

“Energy prices were up quite a bit beforehand, but certainly this hurricane is really emphasizing the problem,” Francl said.

“Farmers only get 20 cents on average of the food consumer dollar,” he said. “The other 79 or 80 percent goes to processing, packaging, shipping and distribution of food. Those are all going to be affected by energy prices.”

Chicken prices might remain stable, Francl said, even though most chicken slaughter facilities in Mississippi, which accounts for about 10 percent of the nation’s chicken production, were knocked out of operation. Broiler production had been increasing nationwide before the hurricane, he said.

Farmers in the region will get help paying loans from the government, the Farm Credit Administration said Friday. The government can extend loan terms, restructure debt, ease requirements for documentation or take other steps to make loan repayment easier.

“The hurricane will have long-term effects on agriculture across the nation and in rural America,” said Nancy C. Pellett, FCA board chairman and CEO.

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