The effects of Hurricane Katrina will be felt in the country’s agricultural business as poultry plants and other businesses along the beleaguered Gulf Coast struggle with power outages and many crops await shipment, according to insurance brokerage Aon.
“A million pounds of processed chicken is probably rotting in the heat right now,” said Tami Griffin, senior vice president of Aon’s agribusiness group. “Mississippi produces ten percent of the nation’s chickens, and most of the state’s 14 processing plants are offline.”
Griffin noted that some of these plants have been damaged and many do not have power or water. In addition, many of the farms that supply chickens to the processors have been hit hard by the storm. Hundreds of chicken houses, many of which contain thousands of birds, were damaged. It is difficult to estimate the full extent of the damage, but she says it may take weeks or months for full production to resume.
The short- and long-term future of the oyster industry is in question as well, since many of the docks and boats used to harvest the mollusks have been destroyed. Griffin says pumping the polluted water out of New Orleans and into the Gulf of Mexico will likely have an environmental impact on the entire Gulf coast fishing industry as vegetation and marine life struggle to deal with the toxins.
Griffin says that it appears that sugarcane fields throughout the Gulf coast have been flattened, and two major sugar refineries near New Orleans are no longer operating. “Sugar supplies were already tight before the storm,” she says.
Avocado prices may increase as early estimates indicate some 70 percent of Florida’s avocado crop was lost.
Grain producers are now scrambling to find alternatives sources of transportation. Nearly 70 percent of the nation’s grain exports (wheat, corn, soybeans) go through Louisiana. The Port of New Orleans also handles a large amount of imports such as bananas, coffee, forest products, and other goods. The temporary disruption of the port’s operations forces producers to find other ways to move their product in the short-term, substantially increasing the cost. Griffin says moving grain by rail or on trucks is considerably more expensive than by river barge.
Fuel costs are a major concern for farmers getting ready for harvest, Griffin adds. The equipment needed to harvest crops requires large amounts of fuel, and the cost is much higher than previous years, yet the price per bushel is not. Fertilizer prices will also increase substantially, she says, as major fertilizer plants are located in the Southeast and rely on natural gas, the cost of which is rising rapidly.
Aon Corporation, based in Chicago, is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon’s 500 offices in more than 120 countries.