Trade impacts of Hurricane Katrina

by Charles Kruse

When we think of the destruction caused by Hurricane Katrina, the image of the many thousands of people stranded in New Orleans at the Superdome and Convention Center quickly come to mind. Accounting for all the victims and finding accommodations for those who lost their homes and jobs remains the top priority, but it is important to point out the hurricane destruction was not limited to the urban areas of the Gulf States; rural sectors also faced critical devastation.

Farmers hit by Hurricane Katrina are dealing with crop damage or destruction, livestock losses and, in the case of the dairy industry, lack of refrigerated transport forcing farmers to dump their milk. While these farmers and ranchers are suffering as a direct result of the hurricane’s damage, American agriculture around the nation is also feeling the impact of the storm.

The devastation of Hurricane Katrina leaves no doubt about the importance of the lower Mississippi River and the Louisiana port system to agricultural trade. Farmers in major grain-growing states like Missouri rely on the Mississippi barge system to carry corn, soybeans and wheat to ports in the New Orleans area for export. Flows from the Missouri River are now critical to ensure the Mississippi River channel can accommodate barge traffic.

In 2004, New Orleans was the most important export point for several crops; 68 percent of soybeans, 71 percent of corn and 52 percent of rice were exported through the Louisiana port. New Orleans is also an important port for the export of wheat, handling about one quarter of U.S. wheat exports.

Hurricane Katrina caused substantial damage to waterways, particularly the lower Mississippi River, grain handling facilities, power facilities and navigational aids, but it should also be noted a large number of the staff who worked within the port facilities evacuated the area.

According to the Department of Agriculture, there are 10 export grain elevators surrounding New Orleans with a storage capacity of approximately 53 million bushels. These 10 elevators, combined with three “floating rigs,” have the capability of loading 970,000 bushels per hour when fully operational.

On Sept. 8, the USDA estimated the elevators and floating rigs were working at about 63 percent of capacity. Restricted vessel and barge movements, and limited utilization of loading capacity due to staff shortages, are having an impact on the speed of exporting U.S. grains.

While ships are again moving, there is a lot of work underway to ensure the port area reaches full capacity in time to deal with the full onslaught of the U.S. grain harvest season. Work is currently focused on restoring power to facilities, ensuring adequate staffing and reinstalling navigational aids to ensure safe passage.

USDA officials say most countries importing agricultural products from ports in the Gulf area have significant stockpiles to deal with the temporary disruptions in shipping. For example, China, the largest customer for U.S. soybeans, has approximately 4.1 million tons of soybeans stockpiled. This is equivalent to about 10 percent of annual Chinese consumption. Also, our largest market for U.S. corn, Japan, is estimated to have 1.3 million tons of corn stockpiled.

The competitiveness of U.S. agriculture in export markets depends heavily on our efficient, low-cost inland waterway system and modern port facilities. Restoring that efficiency is crucial to the future of agricultural trade and American agriculture.

(Charles Kruse, a fourth generation farmer from Stoddard County, serves as president of the Missouri Farm Bureau, the state’s largest farm organization.)