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Louisiana: multi-million dollar losses

Louisiana's farmers are facing lost income from reduced yields and product quality in the neighborhood of $370 million to $450 million as a result of the effects of Hurricane Gustav, according to economists with the LSU AgCenter.

“These estimates are very preliminary,” said Kurt Guidry, an LSU AgCenter economist. “They could move up or down as we learn more.”

Guidry said statewide losses are unlikely to approach the dollar levels of hurricanes Katrina and Rita, and infrastructure damage appears to be much less in 2008.

Production losses following hurricanes Katrina and Rita in 2005 were more than $1 billion.

The economists warned, however, that increased production costs this year, particularly for fuel and fertilizer, have put agricultural producers at greater financial risk than from the 2005 storms.

“As such, profitability is much more sensitive to fluctuations in revenue,” Guidry said. “Therefore, while total estimates of lost revenue may not be as large in 2008, increased production costs and increased financial risks could be greater for many producers than was the case in 2005.”

Guidry said the losses are based on estimates of current values of commodities yet to be harvested compared to estimates of crop values prior to the storm.

The estimates are based on observations from LSU AgCenter production specialists who are surveying the various crops in fields throughout Louisiana, Guidry said. “They'll continue to provide new information based on what they see,” he explained.

The losses to individual producers depend on the crop, said Mike Salassi, an LSU AgCenter economist. “It varies a lot,” he said.

The hardest hit commodities — as a percentage of economic loss — are sweet potatoes and cotton, Guidry said. The economist said estimates indicate the state's sweet potato producers stand to lose 40 to 45 percent of the crop's pre-storm value as a result of torrential rains and subsequent flooding.

The true extent of sweet potato loss “will depend on weather in the next three to four weeks,” Guidry said. If the soil stays too wet, the potatoes will lose quality and even start rotting in the ground.

The other crop facing significant loss is cotton. The economists estimate revenue losses of 40 to 45 percent of the pre-storm value of the Louisiana cotton crop because of a combination of wind and heavy rain.

“Because the storm came so close to harvest, a lot of bolls were blown off the plants, and what's left is facing a loss of quality,” Guidry said.

The pecan crop also faces a 35 to 40 percent revenue loss as a result of strong winds. Future years' crops could be affected because of damaged trees, Guidry added.

The LSU AgCenter economists estimate the remainder of the state's agricultural crops will saddle producers with losses in the range of 5 to 10 percent.

Because soybeans have a wide maturity range, some fields are ready to harvest now while others are still several weeks from harvest.

From both a quality and quantity standpoint, those fields closer to harvest likely experienced the most significant damage and would account for most of the 15 percent estimated losses, but the rest of the crop is not out of the woods, Guidry said. “Everything depends on the weather in the next three to four weeks,” he said.

The economists are estimating 7 to 10 percent lost revenue from the rice crop. The LSU AgCenter estimates 80 to 85 percent of the rice crop in the southwestern part of the state has been harvested, while 80 percent of the crop in the northeastern part of the state is still in the field.

Guidry said 20 to 25 percent of the state's rice, which comes from harvesting a second crop following the first harvest, should not be affected by the hurricane.

“We can't determine total damage until harvesters are in the field,” Guidry said. “With some commodities we're several months away from seeing the true lingering effects of Hurricane Gustav.”

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