Inside D.C.

DC Must Step Up on Flood Disaster Aid Now

Widespread historic flooding across Midwest can’t be dismissed by Washington, DC, lawmakers as a “seasonal thing” or a one-off event.  It will have dramatic negative impact across the agriculture supply chain, from forcing some producers out of business to keeping other farmers from spring planting, to drastically cutting the cattle supply to springboarding feed prices higher, and generally setting up an ugly spring and summer, 2019.

Heavy winter snows beginning spring melt compounded by a freak and historic “bomb cyclone” last week that combined blizzards and torrential rains and subsequent flooding have caused billions of dollars in damage to grain and livestock operations, transportation infrastructure and river movement across 10 states.  Experts say the disaster is on track to be worse than historic flooding in 2011 and isn’t over yet.

The weather disaster comes as producers prepared to go into their sixth year of depressed prices and record low farm income, by some estimates as low as 50% of what farmers earned five years ago.  The ongoing Trump administration trade wars with China and other trading partners has poured salt in that open economic wound. 

President Trump late this week declared Nebraska a federal disaster and Iowa is expected to soon request the disaster designation.  It’s reported 79 of 93 counties in Nebraska have declared emergencies, and officials stressed damage estimates are preliminary as the flooding is expected to continue into next week, and flood waters haven’t receded in some counties.   At last report, about half of Iowa’s 99 counties carry disaster status.  Iowa Gov. Kim Reynolds told one reporter her aerial review of the flood waters “looked like an ocean.”  

The worst flooding is occurring along the Missouri River bisecting Nebraska, and earlier this week it was estimated ag in that state has taken a $1.38-billion hit so far.  It’s estimated losses include $400 million in livestock losses, $440 million in lost grains and oilseeds, including millions of bushels of uninsured corn and soybeans stored on-farm for feed use or waiting for market moves. These numbers don’t include another nearly $450 million in infrastructure damage, according to Gov. Pete Ricketts and Agriculture Director Steve Wellman.  

Major and local grain elevators, feed mills, oilseed processors and biofuels refiners have been closed by flooding, along with major meat processing plants.  Levees, dams, major state and county roads, highways, bridges, overpasses, along with stretches of rail tracks, have been washed out or are inaccessible. Flooding has jacked transport costs for rail and barge lines, translating to lower prices to farmers to discourage selling.

While Vice President Mike Pence toured Nebraska and Iowa farms last week, promising farmers, “We’re going to make sure that federal resources are there for you” – a pledge echoed by President Trump – Agriculture Secretary Sonny Perdue told Fox Business News this week Congress may need to step up and provide additional help for the flooded region as USDA’s traditional programs likely won’t provide enough money “for these farmers who have lost everything.”  Change that “Congress may” need to step to “Congress had better step up.”

“We hope we will have a supplemental disaster program out of Congress very soon. This may be included in that as well,” said Perdue about a disaster aid bill stuck in Congress since January.  

Senate Majority Leader Mitch McConnell (R, KY) set next week for a vote on a $14.2-billion disaster package approved by the House.  However, that legislation is designed to make generally whole producers affected by hurricanes in Texas, Florida, Georgia and Alabama, as well victims of last year’s California wild fires.  There’s no guarantee additional specific Midwest flood assistance will be included in the disaster bill, but Perdue said he expects Congress will move to provide aid. 

Another option as Congress cobbles together a broader unrelated tax package next month, lawmakers could approve tax breaks for disaster victims, including the possibility of breaks for farmers and ranchers that would allow deductions for casualty losses, extending filing deadlines and making more generous limits on deductible contributions and waiving penalties for retirement account withdrawals. 

Said Nebraska’s Wellman: “We’ll rebound as best we can.”