Flooded farmers to eat cost of damaged grain in storage

Major flooding near Lincoln, Nebraska on March 15, 2019.  (Photo: Jamie Titus/Nebraska Air National Guard)

Major flooding near Lincoln, Nebraska on March 15, 2019. (Photo: Jamie Titus/Nebraska Air National Guard)

Hundreds of farmers may be out of luck trying to recuperate losses after last month’s historic floods in the Midwest. Millions of bushels of grains were destroyed in more than 800 on-farm storage bins – mostly in eastern Nebraska and western Iowa – and U.S. Department of Agriculture (USDA) Under Secretary Bill Northey recently told Reuters that, under current laws and disaster aid programs, there’s nothing the U.S. government can do to help.

The USDA has no policy to compensate farmers for damaged crops in storage, Northey said. It’s a problem never before seen on this scale. Part of the reason is that U.S. farmers have never stored so much of their harvests until now. It’s been happening because of years of oversupplied markets, low prices and the latest blow of lost sales from the U.S. trade war with China – previously their biggest buyer of soybean exports.

In 2018 the USDA made $12 billion in aid available to farmers who suffered trade-war losses, without needing Congressional approval. The department has separate programs that partially cover losses from cattle killed in natural disasters, compensate farmers who can't plant crops due to weather, and help them remove debris left in fields after floods.

However, the USDA has no program to cover the catastrophic and largely uninsured stored-crop losses from the widespread flooding, triggered by the “bomb cyclone” that hit the region in mid-March. Congress would have to pass legislation to address the harvests lost in the storm, according to Northey.

“It’s not traditionally been covered,” Northey also told Reuters. “But we’ve not usually had as many losses.”

Indigo Ag, an agriculture technology company, identified 832 on-farm storage bins within flooded Midwest states. They held an estimated 5 to 10 million bushels of corn and soybeans – worth between $17.3 million to $34.6 million – that may have been damaged in the floods.

Northey noted that some members of Congress have expressed interest in drafting legislation to provide aid for damaged crops in storage. But passing legislation could require a lengthy political process in the face of an urgent disaster, U.S. Senator Charles Grassley (R-Iowa) told farmers at a meeting in Malvern, Iowa.

According to Bloomberg Business, U.S. farm incomes have hit a 12-year low, and many farmers had planned to sell their grain in storage for money to live, pay their taxes or finance operations, including planting this spring. Farmers will have to destroy any grains that were contaminated by floodwater, which could also prevent some growers from planting over-saturated fields.

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Farmers are already in a tight position. Chapter 12 bankruptcies in the Midwest increased by 19 percent from 2017 to 2018, according to data from the American Farm Bureau Federation. The odds of making up for their losses doesn’t look good for farmers counting on stored grain to make loan payments and stay afloat.

The storm flooded at least 1 million acres of U.S. farmland across nine major grain-producing states, according to satellite data analyzed by Gro Intelligence for Reuters. This includes around 210,000 corn acres and around 225,000 soybean acres (crops grown in 2018) in eastern Nebraska and western Iowa.

Because of rainfall, snowmelt and ice jams, the Red and Buffalo rivers are still rising in the Dakotas and Minnesota, where the National Weather Service (NWS) has posted Flood Warnings. Flood Warnings are also in place downstream in the middle and lower Mississippi River valleys, from St. Louis to New Orleans. The spring outlook from the National Oceanographic and Atmospheric Administration (NOAA) looks bleak, with meteorologists stating they expect above-normal rainfall and persistent flooding across the nation’s heartland at least through May.

Farmers may be able to recoup some losses, even if they’re not from stored grain, and some insurance plans may include flood damage. If not, some farmers could qualify for benefits from the Federal Emergency Management Agency (FEMA).