U.S. Agriculture After Hurricanes Katrina and Rita: Status and Issues

Publication Date: October 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Agriculture, forestry and fishing

Type:

Abstract:

On August 29, 2005, Hurricane Katrina struck the Gulf Coast region coming ashore just east of New Orleans. On September 24, 2005, Hurricane Rita hit the Gulf Coast region making land fall near the border of Texas and Louisiana. Both hurricanes left behind widespread devastation. Rita appears to have done most of its damage to energy infrastructure off-shore in contrast to Katrina which devastated large swaths of Louisiana, Mississippi, and Alabama. This report examines the impact of these hurricanes on three important factors affecting the U.S. agricultural sector: marketing infrastructure based on the Mississippi River waterway and Gulf ports; production losses for major crop and livestock producers in the affected region; and potential consequences for agricultural production as a result of high energy costs. It also discusses the federal government response to agricultural concerns.

Agricultural producers from the states directly impacted by Katrina have suffered economic losses, although this varies greatly by crop and locality. Preliminary estimates by USDA is that Hurricane Katrina contributed to $882 million in total crop, livestock, and aquaculture losses. Those activities most affected were aquaculture ($151 million), sugar cane ($50 million), and cotton ($40 million). The damage estimate does not include losses in timber and nursery and greenhouse products. No preliminary estimate has been released by USDA concerning agricultural damage from Hurricane Rita.

Hurricane Katrina temporarily halted the flow of agricultural trade through New Orleans -- a major gateway for U.S. oil imports and agricultural exports -- causing commodity prices to decline in interior markets along the Mississippi River waterway. Although partial recovery of marketing infrastructure occurred soon following Katrina's passage (with a brief shutdown in late September due to Hurricane Rita), substantial congestion and high costs continue to plague the Mississippi River grain transport network. This traffic bottleneck and its depressive effect on farm commodity prices could persist into the spring of 2006.

Energy prices jumped substantially in early September 2005, as a significant portion of U.S. petroleum and natural gas production, import, and refining facilities were damaged and shut down. There is considerable uncertainty surrounding the permanency of energy price rises and their potential impact on the U.S. economy in general, and U.S. agriculture in particular. By raising the overall price structure of production agriculture, sustained high energy prices could result in significantly lower farm and rural incomes in 2006.

Certain ongoing federal programs, primarily crop insurance and disaster loans, are available to eligible producers. The combination of Hurricanes Katrina and Rita with a Midwestern drought might also cause Congress to consider supplemental crop and livestock disaster assistance. This report is intended as an overview of how the hurricanes have affected and are likely to continue to affect the agricultural sectors of both the impacted regions and the United States. It is not intended to provide a day-to-day update of events. It will, however, be updated as events warrant.