A Virginia Tech economic analysis suggests the final price tag for the damage from Hurricane Helene to Virginia’s agriculture, forestry, and related industries will fall between $416 million and $630 million.
Those numbers include previous estimates of direct losses and replacement costs on farms as well as projected future income losses for farms and communities impacted by the hurricane.
Associate Professor John Bovay in the Department of Agricultural and Applied Economics worked with Virginia Cooperative Extension to provide a comprehensive, forward-looking damage estimate to inform federal and state relief.
As of Nov. 8, Extension agents in 23 localities and the Virginia Department of Forestry had estimated $174.2 million in direct losses from the hurricane. Using their estimates and input, Bovay was able to calculate and include future losses and ripple effects to the regional economy.
Bovay estimated future income losses for farmers at $50.7 million – primarily from land being taken out of production by the storm damage. He said those losses will be heaviest for Virginia producers of Christmas trees, blueberries, beef cattle, and apples.
He also evaluated the “ripple effect” that farm and forest landowners’ losses would have on the regional economy at between $191.1 million and $404.8 million.
Bovay answered questions about his economic analysis and what it means for Virginia producers and consumers.
Why is it important for state and federal relief funding to take into account both past and future losses?
When evaluating the hurricane’s impact, it’s also important to estimate the indirect impact of future losses. These are the ripple effects on the regional economy that happen when farmers lose income. For example, farmers’ suppliers and commercial buyers both lose income, and any reduced consumption — for example of food, gas, or other consumer goods — leads to less income for others in the region.
Relief funding based only on losses in the current year would not adequately compensate farmers and communities with heavily damaged land or infrastructure that took time to rebuild or with perennial crops or animal herds that required time to be brought back to full productivity. We need to consider the reductions to income that will occur if land is taken out of production or damage to land, buildings, or infrastructure is expected to reduce productivity in future years. In addition, we accounted for lost income over multiple years and the time required to reestablish normal production for farms that lost apple trees or cows and calves, for example.
Can you provide an example of a farm or commodity you looked at in arriving at your calculations and how you assessed the longer-term impacts that would confront them?
A blueberry farmer lost all of the bushes he had planted because of flooding and will need to relocate his operation to another site that is not susceptible to flooding. Because blueberry bushes require about four years to begin producing enough fruit to become profitable and a few more years after that to reach full production potential, the farmer has lost many years of income and will also need to incur costs to establish the bushes in the new location. Our new approach to estimating future impacts accounts not just for the lost sales this year, but also all of the additional expenses and reduced sales for the next several years, relative to what the sales would have been without Helene.
Outside of the impacts on farms, how do you see this affecting the economic health of the surrounding cities and counties?
Agriculture is a large source of income in Southwest Virginia, especially when considering the ripple effects that I described earlier. Helene devastated many of the communities in the region, and it will take large investments in infrastructure and general recovery efforts to help the communities return to normal economic conditions. Some farmers will, unfortunately, need to invest in additional land to continue operating similarly to the way they were a few months ago, because of the infeasibility of restoring their land to the condition it was in before the storm.
How will this impact consumers in Virginia? Can we expect to see any differences in access to agricultural products or services?
This is one area where we have good news: Even though Southwest Virginia farms were devastated by Helene, there won’t be much impact on consumer food prices. The food supply chain is nationally — and internationally — integrated, and the lost value of sales of food products and animals this year because of Helene is estimated to be about $13.5 million. The other impacts this year are from timber and damage to facilities, land, infrastructure, and equipment.
This $13.5 million impact is a tiny share of the total value of Virginia and United States agricultural production, and because consumers pay much more for their food than farmers receive for what they produce, impacts for consumers will be minimal.
An exception to what I just said is that consumers in Southwest Virginia who buy locally produced food will find some of their favorite products in short supply, especially if they buy food from farmers they know personally who were affected by Helene.
Why is there such a wide range of estimated impact – at $416 million to $630 million?
We drew on estimates of the indirect effects of Helene from North Carolina and Georgia. In North Carolina’s case, the indirect effects were slightly less than the direct effects, but in Georgia, they were almost double. So, the range implied is that the total economic effects – direct plus indirect — are roughly two to three times the direct effects that we can more easily estimate.
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