The Cost of Natural Disasters in North America and Consequences for Agri-Producers

Published 2022년 10월 4일

According to the National Centers for Environmental Information (NCEI), weather/climate disaster event losses exceeded USD 1B before Hurricane Ian. Orange production in Florida and cereals in Charleston and South Carolina were most affected by severe storms and heavy rainfalls. Also, a recent earthquake in Mexico in the region near Michoacan, prominent with avocado production, experienced significant infrastructure damage. In Michoacán, Colima, and Jalisco, several roads and bridges were damaged which may impact local logistics, increasing transportation costs and causing delays in shipments.

Effects of Natural Disasters on Agricultural Production

Source: The National Centers for Environmental Information (NCEI)

Not taking Hurricane Ian into account, according to the National Centers for Environmental Information (NCEI), in 2022 (as of July 11), nine weather/climate disaster events with losses exceeding USD 1B each affected the US. Events included one drought event and eight severe storm events. Overall, these events resulted in significant economic effects on the areas impacted. The impact of disasters on agriculture extends beyond production loss alone. After disasters, crop and livestock production decline can trigger sudden changes in agricultural trade flows. As countries try to compensate for domestic loss, they increase import expenditures and reduce export revenues. Due to adverse weather conditions, and natural disasters agriculture suffers. Direct losses in agriculture production often threaten economic stability, especially for developing countries.

US Crop and Fruit Affected Areas

Hurricane Ian hit Florida at 150 mph causing significant damages and casualties. The category four storm caused widespread damage in Florida, South Carolina, and Cuba, forcing tens of thousands to evacuate. Agricultural producers in Florida, coincidently a major agriculture producing region in the United States, will experience serious difficulties in production volume and quantity due to the disaster. The state is already facing difficulties as the citrus production for the 2021/22 season totaled 5.61M MT, down 19% YoY. Florida accounted for 36% of total citrus production according to the US Department of Agriculture (USDA) in the citrus fruit report for September this year. Orange production in Florida fell 22% from the previous season, reaching 41.1M boxes. With Hurricane Ian, citrus groves in the state will likely receive heavy rainfall. As the storm heads into Georgia, the heavy rain will push out, covering the Carolinas and Virginia with bouts of heavy rain. According to the USDA NASS Crop Progress report, soybean is at risk of severe damage due to just 10% harvested area and only 52% of soybean dropping leaves. Cotton crops should escape more substantial damage, but it will depend on successful harvest and farmers' progress before the impact of hurricane Ian. Corn is already 74% harvested in North Carolina, with 94% of it mature. Catastrophic flooding is expected across portions of central Florida, with considerable flooding in northern Florida, south-eastern Georgia, and coastal South Carolina.

Mexico's Consequences of the Earthquake

The 7.6-7.7 magnitude earthquake hit Mexico on September 19th between Michoacán and Colima. Although the earthquake didn't affect agricultural production, substantial damage was done to infrastructures like building roads, ports, and other storage capacities which will cause delays in shipments and increasing costs due to rerouting. Michoacan is well known as an avocado-producing area. According to data from Banc of Mexico, until September 22, international sales of avocados from Mexico were USD 1.761B, up 13.4% YoY. Earlier this year, the Jalisco region was allowed to export avocados to the US along with well-established quantities from Michoacan, which helped increase the amounts exported. Expectations are that earthquake damage will indirectly influence the price movement of agricultural products in Mexico through increased logistic costs.

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