Planting Delays Likely With More US Flooding on the Horizon

03 April 2019

Massive flooding recently in many parts of the US Midwest underscores the economic risks to the region’s farmers, agribusinesses, and crop insurance companies.

Gro Intelligence has estimated the extent of cropland and pastureland affected by the flooding, making use of NASA satellite data in conjunction with NASS Cropland Data Layer (CDL). We calculated that at least 1 million acres in the US Corn Belt were affected, with Iowa and Missouri the hardest hit. Gro's latest analysis showcases the increasing breadth of possible applications for the Gro Platform.

While it’s too soon to predict the impact on this season’s planting, which normally gets underway by the middle of April, it’s safe to assume a potentially significant number of acres will need to be taken out of production because of the flooding. The last time the region had substantial prevent-plant acreage was in 2013, when floods resulted in 7.3 million acres that couldn’t be seeded.

Flooding overall accounts for 60% of losses to the crop sector as a result of natural disasters, four times as much as losses due to drought, according to the UN’s Food and Agriculture Organization. In the US Corn Belt, insurance companies, subsidized by the federal government, pick up a sizable portion of that bill.

Losses from the latest flooding also extend to agribusiness: Archer Daniels Midland said it expects Midwest weather-related disruptions to reduce first-quarter earnings by $50 million to $60 million. Direct damage, including to structures, roads, and bridges, is currently estimated at more than $3 billion and is likely to increase further. The weather event, nicknamed the “bomb cyclone,” also took the lives of at least three people.

In this Weekly Insight, we examine the floods’ impact on Midwest cropland and farmers’ planting intentions for the upcoming season, especially in light of forecasts for still more flooding. We also explain how we were able to calculate in a few days the number of acres underwater in each state, estimates that were later verified by independent experts on the ground in a Reuters report. Such damage estimates, while only approximations because of the rapidity of putting them together, are extremely useful to hosts of companies that need to begin making contingency plans.

Read more:

More Flooding Expected
Gro’s Flooded-Cropland Analysis
Conclusion

More Flooding Expected

In April 2013, heavy rainfall and flash floods hit several Midwestern states. Flood warnings were in effect from Michigan to northern Arkansas and Tennessee, and corn planting was delayed significantly. By mid-May only 28% of corn was planted compared with a 68% average for the previous five years.

The chart on the left shows how far behind corn planting was in 2013 compared to a 5 year average. The chart on the right shows area that was prevented from planting in the biggest producing states. 2013 stands out from the relatively benign environments recently.

 

In the years following the 2013 deluge, summer row crops have enjoyed favorable weather. Bumper crops and new competition from South America resulted in an extended period of low prices, which strained farmer finances. Stalled soybean exports as a result of the US/China trade dispute further beleaguered the Corn Belt. The American Farm Bureau estimates bankruptcies in the Midwest were up 19% in 2018 from a year earlier.

At the moment, all signs point to continued disruptions to planting and growing of crops for the upcoming season. The National Oceanic and Atmospheric Administration (NOAA) said in its spring outlook on March 21 that additional spring rain and melting snow will prolong and expand flooding. Twenty-five states are at risk for moderate to major flooding through May, NOAA said.

Flooding also is expected in the Red River of the North drainage basin, which includes North Dakota and Minnesota, where snow depth is at a 12-year high, a recent analysis by Gro showed.

“The extensive flooding we’ve seen in the past two weeks will continue through May and become more dire and may be exacerbated in the coming weeks as the water flows downstream,” said Ed Clark, director of NOAA’s National Water Center.

It is difficult to predict how large an area will ultimately be prevented from planting. Planting typically begins in the Midwest in the next couple of weeks, but even if flood waters recede, farmers will have to determine the amount of sand and silt that was deposited on their land and if it is worth planting a crop that is likely to have inferior yields.

Farmers have until May 31 in most Midwestern states to decide whether they’re unable to plant and receive a payout on prevent-plant insurance policies, which typically cover around 55% to 60% of lost revenue. Most farmers will try to plant their crops if at all possible, and insurance generally supplements any revenue declines because of poor yields.

Planting can happen late in the season as gains in technology, from the size of planters to GPS that allows automated planting, expedite progress. In the flood-stricken spring of 2013, for example, planting was delayed, but farmers managed to plant 43% of the corn crop in a single week.

The USDA’s Farm Service Agency (FSA) will not release its first measurement of area prevented from planting until August.

Gro’s Flooded-Cropland Analysis

Gro performed an analysis of the amount of crop area affected by the recent flooding. The analysis combined a measure of flood coverage provided by NASA’s Near Real Time Global Flood Mapping product and compared that at the pixel level against the NASS Cropland Data Layer (CDL). The study focused on the 14-day period of March 8-21 and measured crop area affected across the Midwest. Over 1 million acres across nine states in the Northern Midwest had flooding on at least 50% of the 14-day period, while 5 million acres had at least one occurrence of flooding over that period. Although acreage of this size represents a small fraction of total US cropland, any lost production on the margins can significantly affect the balance of supply and demand, which can impact prices.

NASA NRT Global Flood Mapping product for the 14-day period of March 8-21. The map shows the % occurrence of flood. Southern areas along the Mississippi river had more persistent flood events, but the upper Midwest experienced much more widespread flooding.
The NASS Cropland Data Layer (CDL) gives a pixel level measure of land types based on USDA information. This layer was compared to the NASA Flood Mapping to isolate flooded cropland.

 

Iowa and Missouri had the largest amount of acreage impacted by flooding, at 474,272 acres and 203,188 acres, respectively, based on the more conservative analysis of 50% or more flooding days. Those figures were in line with estimates given to Reuters by government officials in Iowa and Missouri during the time period in question.

On the high end of the analysis, with at least one occurrence of flooding over the period studied, Iowa and Missouri could have up to 1,638,708 and 333,247 acres impacted, respectively. A number of factors could not be taken into account in this preliminary analysis, such as soil moisture, cloud/snow cover, cloud-shadow correction, and water uptake of the soil. Therefore, the more conservative estimates are thought to be a more diligent analysis of the situation until further research can be conducted.

Minimum Acres Affected refers to the conservative analysis of 50% or more flooding days in the 14-day window. Maximum Acres Affected refers to area that experienced any flooding in the 14-day window.

NASA considers its Global Flood Mapping product experimental. But, overlaid with crop data, it can still be a useful tool in identifying cropland affected by flooding in near real time. For a comparison, Gro performed the same analysis for Iowa in the second half of March 2013, the last time there was major flooding. A significant amount of crop area was shown to be affected by floods in that earlier period and, when official numbers were released later in 2013, they showed a sizable amount of acreage was prevented from planting. 2013 was the most recent year that the Federal Crop Insurance Corporation (FCIC), an arm of the USDA, paid out more in indemnities than premiums it received. 2019 is setting up to be another year for net losses for federal crop insurance.

US farmers already were expected to reduce their planted acreage for corn, soybeans, and wheat in the upcoming season. The USDA’s Prospective Plantings report, released last week, projected combined planted area will fall 4.2 million acres from last year, especially on cuts to soybeans and spring wheat, bringing total planted acreage to its lowest level since 2011. Ample stocks and low futures prices for grains are driving the lower plantings.

USDA’s quarterly Grain Stocks report showed record or near-record amounts of corn, wheat, and soybeans on hand as of March 1. The subsequent flooding damaged many silos and storage facilities, destroying some idle grain. The extent of the loss will not be known until the next USDA Grain Stocks reports, but supplies were quite comfortable before the flooding.

The chart on the left shows quarterly soybean stocks in the US at record levels for the last two quarters for their respective point in the season. The chart on the right shows planting intentions from the recent USDA report indicate combined area of corn, soybeans and wheat would be the lowest since 2011.

The Midwest flooding can have negative consequences as far away as the Gulf of Mexico. Nutrients that are washed out of the cropland soil travel down the Mississippi to the Gulf and fuel algae blooms, which suck up oxygen and put pressure on marine life and fisheries. Recent NOAA-funded research shows how this “dead zone” causes brown shrimp to avoid the area and results in fewer high-value large shrimp being caught. 2017 had the largest dead zone on record, but extensive flooding could result in a new record. NOAA and the U.S. Geological Survey will issue their annual dead-zone forecast in early summer.

Conclusion

The threat of continued flooding after an already massive loss will hang over the Midwest for another couple of months. Farmers, traders, insurers, and end users alike will be closely watching weather forecasts, river gauges and NOAA reports. Tools like NASA’s flood monitor and the analysis Gro performed can aid in the assessment of flood impact on vulnerable cropland. 2019 could be the first season in several years with a significant amount of area prevented from planting. But if the weather cooperates and farmers can salvage the affected fields and get the crops in the ground, abundant soil moisture could facilitate another year of excellent yields.

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