Farmers face sad sights and big decisions

The murky floodwaters sloshed against farmhouses, telephone poles, towering silos. They call the windswept fields here "the bottoms," a 50,000-acre stretch of rich, dark soil along the Mississippi River that farmers have tilled for generations.

Riding in a friend's flat-bottom fishing boat, 60-year-old Robert Kuntz and his two grown sons, Chad and Trent, surveyed the damage late last week. Their corn and soybean crops on half of the 2,500 acres they farmed were ruined when a levee burst a few days earlier.

Days before mandatory evacuation, the farmers and their wives and children moved to safe ground. They hauled away their stored grain, farming equipment and furniture. But all three families nearly lost their homes, giant storage bins, barn-sized work sheds and other property to the flooding.

"All that hard work and labor we put into it," says Robert Kuntz, his voice cracking. "I've never been through such a horrible ordeal. Who knows how many of us will come back?"

The Kuntz family and thousands of other farmers could only watch and pray as the Midwestern flooding last month destroyed 5 million acres of crops and damaged untold property. Even as the floodwaters subside, the agricultural carnage — estimated at $8 billion by the American Farm Bureau Federation — will spread into the broader economy.

Ripple effect of costs

The flood's economic impact could surpass the $12 billion (about $18 billion in today's dollars) in damages from the great Midwestern flood of 1993, which killed 50 people, destroyed thousands of homes and closed businesses for months.

"The ripple effect goes from the agricultural and food-supply chain all the way to the retail consumer, where it'll hit Joe Smith's wallet," says Jordan Rizzuto, senior economic analyst at Storm Exchange, a firm that provides weather-related risk information to businesses.

According to Storm Exchange and other economists and industry officials:

•Hundreds of barges full of grain, coal and petrochemicals for U.S. factories and export markets still aren't moving on the Mississippi, Missouri and Illinois rivers, says Lynn Muench, senior vice president at the American Waterways Operators trade group. That could cost shipping firms $50 million in losses, says Storm Exchange.

•Corporate earnings could fall for transportation firms such as Union Pacific, which says the floods will cut its earnings this quarter by 5 cents a share. Another blow to food companies: Standard & Poor's has lowered credit ratings for Tyson Foods, Pilgrim's Pride and Dean Foods.

•Prices could spike for energy, livestock feed, hogs and cattle. Strong U.S. and worldwide demand for those commodities, amid limited supplies, will ignite even more volatility.

•In supermarkets, the cost of milk, eggs, butter, flour and other items already are rising at double-digit rates, and food producers likely will pass on their higher costs to consumers in the coming months.

The full impact in the disaster zone won't be known for six to 12 months, after federal aid fully kicks in and insurers decide how much crop and property damage to cover, says senior economist Rick Mattoon at the Federal Reserve Bank in Chicago.

Based on the 1993 flood and other disasters, Mattoon expects the small business and tourism sectors to suffer, with farming, construction and manufacturing bouncing back quickly in a mini-economic boom.

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