Estimated Economic Impacts of the 2019 Midwest Floods

Abstract

AbstractIn the spring of 2019, U.S. agriculture experienced a record high number of prevented planted acres primarily due to historic rainfall across large portions of the Corn Belt and Mid-South. Producers of corn, upland cotton, soybean, and wheat were impacted with a substantial loss of revenue due to no crops being produced and marketed. With about 11.4 million acres of corn not planted, foregone gross revenue from crop sales likely exceeded $6 billion alone. Instead of focusing on the loss of producers’ incomes as a result of prevented planted acres, our analysis focuses on the economic impacts, due to lost sales, for firms that provide inputs to farmers. Acres prevented from planting resulted in producers not incurring typical expenditures for planting and post planting inputs such as seed, crop nutrients, and crop protection (herbicides, insecticides, fungicides, etc.). Agricultural input manufacturers, wholesalers, and retailers do not have similar opportunities to insure against foregone sales and have received no disaster assistance payments. Normally, the large geographic footprint of many of these firms mitigates the impact of localized weather effects. However, given the widespread nature of the wet spring, these firms were negatively affected across Corn Belt and Mid-South representing a substantial production area. Regional economic impact of declines in sales by agricultural input providers due to wet weather-based prevented plantings on 13.1 million acres. Direct sale losses of $2.9 billion led to $4.5 billion losses in total sales that were concentrated in parts of Minnesota, South Dakota, and Illinois.