Potential crop value lost when the Birds Point levee was blown in southeast Missouri totaled $85.2 million, according to a report by the Food and Agricultural Policy Research Institute (FAPRI).
The Army Corps of Engineers opened a 133,000-acre floodway between Birds Point, Mo., and New Madrid, Mo., to relieve flooding at the junction of the Mississippi and Ohio rivers at Cairo, Ill., on May 2.
The economic loss multiplies to $156.7 million when broader economic changes are applied, said Scott Brown, University of Missouri FAPRI economist. The study was requested by U.S. Rep. Jo Ann Emerson, R-Cape Girardeau, and delivered June 16.
The primary study applies to current-year crop loss only and neither long-term impact nor losses to farm and public infrastructure are included, Brown said. Likewise, losses do not include damage from seepage or backwater outside the floodway into the Missouri Bootheel.
The area flooded includes the most diverse crop plantings in Missouri. Crops include corn, soybeans, wheat, cotton, rice and sorghum.
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.
Prices were based on the June 2011 USDA midpoint estimates for the 2011/2012 crop year. That resulted in a corn price of $6.75 per bushel after normal Bootheel crop basis was included.
Local crop budget models from David Reinbott, MU Extension agricultural business specialist, were used to determine variable crop production expenses. The budget was used to estimate input costs. Local observers estimated just over 50 percent of the corn variable production costs had occurred prior to the breach and were lost.
The study indicates variable costs lost this year total $15.7 million.
The next factor entered in the model was reimbursements available to farmers, Brown said. The primary source is crop insurance. Because 2011 data is not complete, the 2010 data was used to imply coverage and type.
The USDA Supplemental Revenue Assistance Payment Program (SURE) payments were included as well. Brown said that money will not reach farmers until late 2012. 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.
“Agricultural dollars flowing into an area pass through many hands. The loss estimates highlight how the levee breach goes well beyond production agriculture,” Brown said.
The land inside the floodway is held under easement by the Corps of Engineers for flood relief.
Advance warnings allowed farmers to move machinery, stored grain and household goods out of harm’s way. However, many assets including buildings, bins and irrigation systems could not be moved.
“Economic estimates in this report may need adjustments as the year unfolds. The damage will be felt for years to come,” Brown said. “However, that was not part of the current study.”
Field reports indicate some soybean fields are being planted. Winter wheat is also expected to be planted this fall.
Record floodwaters rising on the Missouri River will eventually flow to Birds Point before summer is over. Area farmers seek rebuilding of the breached levee.
For the study, a panel of advisers was gathered to point out the complexities of economic losses.
“FAPRI appreciates that help,” Brown wrote in the report. “But FAPRI assumes sole responsibility for the content.”
The full report is on the MU FAPRI website: http://www.fapri.missouri.edu/ .