June 18, 2008

Iowa's agricultural losses estimated at US$2.7 billion 

Flood-related agricultural losses in Iowa will total roughly US$2.7 billion, according to a preliminary estimate generated by researchers at Ball State University and the University of Tennessee.

The researchers arrived at the figure using a statistical model developed after the massive floods in 1993 and verified through its use following Hurricane Katrina. The researchers, Michael Hicks, director of the Bureau of Business Research at Ball State, and Mark Burton, director of transportation economics at UT, also estimated infrastructure damage in Iowa at US$159 million.

In the research published Monday, Hicks and Burton said they believed the current agricultural circumstances in Iowa were similar to the situation in 1993, when reported damage to Iowa agriculture totaled US$978 million. However, given the rapid increase in commodity prices since 1993, the researchers adjusted the 1993 figure by the USDA's May farm price index to generate the US$2.7 billion damage estimate.

Hicks told Dow Jones Newswires Tuesday that he's "confident" in the agricultural damage estimate as to the extent and the timing of the flood.

Around 15 percent to 20 percent of acreage is a "complete loss" in Iowa, he said, adding that because of the short growing season in the state, it would be difficult for farmers to replant.

USDA estimates initially put Iowa corn planting at 13.2 million acres while soy planting was estimated at 9.8 million acres.

Of the US$2.7 billion in agricultural losses, Hicks said, roughly US$2.6 billion represents losses of grain crops like corn or soy.

However, other flood damage, such as the loss of hogs and other livestock, is also included in the agricultural estimate, he said.