As the last almost two weeks have unfolded in the aftermath of Hurricane Katrina's devastation on the U.S. Gulf Coast, many have seen the impacts of the storm a region away on our area. Gas prices leading up to Labor Day weekend was one noticeable impact on the Northwest economy. But what about other impacts on components of our region's economy, particularly from the agricultural point of view? Let's start with one sector&the Northwest sugar beet industry. To explain, Louisiana and other Gulf states produce sugar cane. And the impacts Katrina had on that industry is unknown, according to Jack Roney of the American Sugar Alliance, in one part because of lack of available communication, and in another part because of the nature of sugar cane.
RONEY: It's a very resilient crop and while it may be knocked over by high winds it can bounce back over time if they get some dry sunny weather over the next few weeks so it's really too early to tell how badly hit that cane crop will be in Louisiana.
Now the automatic market response to potential drop in supply would be a price increase. But as Roney points out the U.S. market has some built in mechanisms, courtesy of the federal government, to keep prices under control.
RONEY: Now what U.S.D.A. is doing is taking measures to try to prevent the prices from rising at all by using the powers that it has in operating sugar policy at no cost to tax payers, where they are increasing the domestic supply of sugar onto the market by allowing some excess beet sugar, that beet sugar producers including Amalgamated Sugar in the Northwest U.S., have been storing at their expense to try to balance the market. U.S.D.A. instructs the sugar companies on how much the market needs. If the company's produce more than the market needs, then by U.S.D.A. orders they have to store that up at their own expense. So one outcome of this hurricane that I guess is fortunate for the beet industry is that they now expect to be able to clear all the stocks they had been holding back and that should annul at any rate any price increase.
And U.S.D.A. is also considering allowing some of the foreign sugar scheduled to enter the U.S. at the start of the 2005 crop year October First to instead come into our nation now. That is the short term impact. Long term, Roney says it is too early to tell. In our next program, a look at how Katrina is connected with the ability to ship grains through the Northwest.