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NEW YORK (CNN/Money) -
Hurricane Katrina could cost the nation's farm sector up to $2 billion, affecting Midwest farmers who are unable to ship their goods by barge down the Mississippi River, according to a published report.
The New York Times reported Thursday that corn, soybeans and wheat crops are losing a crucial link to export markets due to the storm and the damage at the Port of New Orleans, which may not reopen anytime soon.
The storm is also affecting farmers in the Gulf Coast region, which the paper reports are still are struggling with a lack of electricity needed to restore chicken and dairy plants to service, and a shortage of diesel fuel needed for trucks to save dying cattle stranded on the breached levees. The storm also flattened sugar cane and rice fields in the South, and drove up prices for fuel used by farmers across the nation.
The American Farm Bureau Federation estimates $1 billion in direct losses for the agriculture industry, as well as $500 million in higher fuel and energy prices, the paper reports. The group estimates that Louisiana lost 2 million tons, or 20 percent, of its sugar cane crop, in the storm, reducing the total United States sugar harvest by 3.5 percent.
The hit to the sector comes at a time when the federal government had been looking to trim farming subsidies, partly to comply with World Trade Organization rules. The paper reports that the House and Senate Agriculture Committees are expected to issue reports next week on how they plan to cut $3 billion in Agriculture Department programs from the federal budget. But the paper said the hit from Katrina could alter the debate in Washington and hamper WTO talks scheduled for December.
"Without question, this makes the reforms that a lot of the rest of the world would like to see happen here in the U.S. a lot more difficult," Clayton Yeutter, a former secretary of agriculture and United States trade representative, told the paper. "The general psychology of the event is clearly negative."
For more on the broader economic impact of Katrina, click here.
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