Flooding on the Missouri River in the summer of 2011 severely affected corn and soybean production, as well as inflicting infrastructure damage on the roads used to carry the crops. Crop losses were total for many farmers, which could force many farming businesses to fold, creating a burden on an already struggling economy. Many crops were underwater for more than a month in the Missouri River Valley. This long-term loss of access to the land for any purposes may make recovery impossible for some farmers. There are some policy and economic factors that may mitigate some losses; some farmers have insurance on either their crops or their income for the year that may cover the losses. Agricultural operators can also terminate their rental contracts if the land is not salvageable for use during the following year. Land owners, farmers, and operators have spent the summer and fall making the determination of which plots are salvageable at all for production in the next few years. Some farms and farmers will be luckier than others, but overall, recovering from such a catastrophe will most likely take years.

What kind of insurance was available for farmers affected by the floods? The typical crop insurance policy in Iowa covers 75% to 80% of a producer’s land, so with a total loss, the farmer will have losses of up to 25% of the total crop. There are also Revenue Protection policies which insure up to 90% of the acreage in Iowa, according to economist William Edwards. These policies provide a price guarantee if commodity prices rise anytime between February and October, and (more relevant to the flood losses), insured farmers get $1 per bushel of corn and $0.25 per bushel of soybeans in the case of a loss. The state agricultural department has also put in place some relief policies for those whose land was wiped out; the savings from these initiatives come to about $20 per acre for soybeans and $70 per acre for corn. Land owners and farmers, therefore, have financial options even if the bulk of their crop revenue has been lost. All of the effects of the flooding probably won’t be known for months, even after the waters return to normal levels. Nature does not follow insurance company schedules, so renters and owners of farmland may be left with additional dilemmas as they recover.

Insurance coverage and state policies can help, but economists like Edwards also say net revenues are still going to be down for the year. Even farmers with 80% insurance coverage on their operation could see total revenues drop by $100 per acre. Some producers may be lucky if they were able to plant on land that wasn’t flooded and get in a late crop, but the flooding was unprecedented in scope. Many farmers have no idea what it will take to bring their land back into full production. Although the valley bottoms are naturally long since dried out, whole farms need massive soil reworking to be viable places to plant again. Debris had to be removed, while eroded areas had to be leveled out and soil re-fertilized to start planting.

Responsibility for repairing flood damaged farms falls to the landowners. However, smart landowners will be using these fallow winter months to work with their rental farmers – the farmers have the heavy equipment and the know-how of how to use it. Some economists have suggested that non-farming owners and their tenant farmers should work out long-term leases on the land to give the farmers a personal incentive to get it back into production, and extend discounts on land rentals for 2012 so that the farmer who does the cleanup will reap the benefit. Both owners and renters can benefit if they work together to get farms back into production.

Sources:

Iowa State University (http://www.extension.iastate.edu/agdm/articles/edwards/EdwAug11.html)

 Trucking info (http://www.truckinginfo.com/news/news-detail.asp?news_id=75178)