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Iowa’s flooding will produce economic ripples beyond the Midwest

Residents ride down a flooded street to their home to rescue their cat in Cedar Rapids, Iowa, last week.
REUTERS/Frank Polich
Residents ride down a flooded street to their home to rescue their cat in Cedar Rapids, Iowa, last week.

As floodwaters recede in hard-hit Cedar Rapids, Iowans elsewhere — particularly along the Mississippi in the southeast — prepare for rising water expected to crest midweek. Others have begun to take stock of the flooding’s effects — and see them spreading far beyond Iowa and the Midwest.

Beyond flood deaths, ruined homes and crops that never got a start, immediate hazards include “a noxious brew of sewage, farm chemicals and fuel,” the Associated Press reported from Oakville.

The AP quoted LeRoy Lippert, chairman of emergency management and homeland security in Des Moines County, as he warned residents to avoid wading in or worse: “If you drink this water and live, tell me about it. You have no idea. It is very, very wise to stay out of it.”

In Cedar Rapids, the AP said, “All manner of refuse could be seen floating down the Cedar River — 55-gallon drums labeled ‘corrosive,’ propane tanks, wooden fences and railroad ties. Dead birds and fish sat on the city’s 1st Avenue Bridge.

“A few blocks away, a paint store stood with its windows blown out. A line indicating the high-water mark could be seen about eight feet above the floor. At the gas station next door, strong currents had knocked over two pumps.”

Return to homes had to wait
According to the New York Times, “On Monday in Cedar Rapids — where the Cedar River crested at 31 feet on Friday — flood waters pulled back and thousands of worried home owners lined up at checkpoints, hoping to return to their properties. But dangerous conditions caused by gas leaks, downed power lines, spilled sewage and the stagnant waters led safety officials to continue blocking people from returning home.”

And at a press conference in Des Moines on Monday, Iowa Gov. Chet Culver said “a special session of the Iowa Legislature to provide state disaster aid is ‘very likely,’” the Des Moines Register reported, adding,  “The governor also said federal disaster declarations had been made in 29 of the 83 Iowa counties where state declarations had been made.”

“Were certainly talking about billions and billions of dollars in damage, and whether that’s related to the agricultural sector, or infrastructure, or individual personal damage, we have a lot of rebuilding to do” Culver said. He predicted the Legislature would meet in perhaps a couple of months.

Looking still further ahead, the Times reported that, “At a moment when corn should be almost waist-high here in Iowa, the country’s top-producing corn state, more than a million acres have been washed out and destroyed. Beyond that, agriculture experts estimate that 2 million acres of soy beans have been lost to water, putting the state’s total grain loss at 20 percent so far, with the threat of more rain to come.”

“This is a pretty big train wreck developing,” Steve Meyer of Paragon Economics in Adel, Iowa, told the Los Angeles Times.

Expect higher prices
“The flood tides enveloping the Midwest will crest across the nation in the form of higher prices in just the places where households have been hit the hardest — food and fuel,” the L.A. Times’ Jerry Hirsch and P.J. Huffstutter wrote. “Analysts estimate that flooded Iowa and Illinois and the other corn states might produce 15% less of the grain than last year. Some believe the shortfall will be larger.

“That pushed corn prices to near $8 a bushel Monday and sparked fears of another jump in food inflation. Already, the cost of food is increasing at its fastest pace in 18 years.”

Hirsch and Huffstutter added, “The developing shortage is expected only to increase competition for corn among farmers, food companies, ethanol refiners and exporters.

“Consumers can expect ‘to pay more at the pump or more in the food aisle, or both,’ said Chat Hart, an agricultural economist at Iowa State University. For now, cattle ranchers, pork farmers, dairies and other food producers will take the largest hit, said Michael Swanson, a Wells Fargo & Co. agricultural economist.”

1.3 million acres lost
Tim Jones of the Chicago Tribune wrote, in a similar vein, that “10 percent of Iowa’s corn crop — about 1.3 million acres — has been lost to flooding or the inability to plant because of poor weather. Soybean losses, according to the Iowa Farm Bureau, are about 20 percent, or about 2 million acres.

“It’s too soon to say what the price impact will be, according to analysts, but dramatic production cuts in two key commodities increase the likelihood that consumers will be paying more for milk, meat, bread and poultry. Perhaps a lot more.”

Jones pointed out that the higher prices cannot “be blamed solely on the extraordinary flooding in Iowa. Rising world demand for food commodities, a shift to producing more ethanol from corn and a swooning American dollar gave birth to stunning increases in corn prices. Worldwide, commodity prices were 43 percent higher in April than a year earlier, according to the UN Food and Agriculture Organization.

“Price pressures accelerated when the spring planting across the Midwest — especially in Indiana and Illinois — was delayed because of cold and wet weather,” Jones added.

“Before the flooding, the U.S. Department of Agriculture last week reduced its forecast for corn production, adding more pressure. The USDA report said only 89 percent of the corn crop had sprouted, well below the five-year average of 95 percent. The later the corn is planted, the more susceptible it is to heat damage in the summer. The flooding made it worse. And when barge traffic on the Mississippi River was shut down Thursday, stopping grain deliveries, that aggravated the situation further. Little wonder the price of corn leaped last week.”

And so, as Cedar Rapids surveys the worst damage, as the University of Iowa assesses the likelihood of reopening 16 flooded buildings by fall, and as towns along the Mississippi River still seek emergency sandbags for cresting expected in a day or two, economic ripples, in turn, spread ever farther. 

Susan Albright, a MinnPost managing editor, writes about national and foreign developments. She can be reached at salbright [at] minnpost [dot] com.

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