Agribusiness Examiner: Special Issue on Aftermath of Hurricane Katrina

THE AGRIBUSINESS EXAMINER September 6, 2005, Issue #421 Monitoring Corporate Agribusiness From a Public Interest Perspective

EDITOR\PUBLISHER; A.V. Krebs
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KATRINA TAKES HER TOLL ON THE GRAIN TRADERS

JANET ADAMY, PAUL GLADER AND DANIEL MACHALABA, THE WALL STREET JOURNAL: For 25 years, Curtis Snider ran a clockwork operation that picked up Central American bananas in Gulfport, Mississippi and trucked them to grocery warehouses across the Midwest. Then, Hurricane Katrina hit, and the clockwork went cuckoo.

Surrounded by a giant map and route charts in his Queen City, Missouri., office, Mr. Snider, who runs R&O Transportation LLC, has been talking on two phones at once to reroute his fleet of 120 trucks to collect bananas instead at Freeport, Texas. As of yesterday, more than half his refrigerated trucks sat idle as he redrew routes and frantically tried to reach drivers. "This is a massive thing to create a new [transportation] lane," he says. "We went in 12 hours from something that worked to nothing."

It could soon get worse. The federal government is struggling to determine how soon Gulfport and other hurricane-ravaged harbors on the Gulf of Mexico can be repaired. Their biggest concern yesterday was the mouth of the Mississippi River, conduit for more than 6,000 ocean-going vessels a year carrying grain, oil, steel, coal, food and other goods.

The port of New Orleans remains closed to ocean shipping, awaiting an assessment of damages caused by Hurricane Katrina. If the river or the surrounding ports are unusable for months, problems like Mr. Snider's could be repeated a million-fold at companies across the country.

Survey crews for the National Oceanic and Atmospheric Administration yesterday began surveying lower Mississippi ship channels for potential obstructions, focusing on the southernmost 20 miles or so. Officials worry about the condition of the channel below the water's surface because aerial surveys show shrimp boats crushed together and numerous barges and vessels washed up on levees along the sides of the channel. Surveying was to resume today.

It can't happen too fast for George Duffy, president and chief executive of NSA Agencies Inc. of St. Rose, Louisiana., which handles logistics of chartering and unloading much of the 25 million tons of grain and five million tons of steel that come into New Orleans each year. As Mr. Duffy juggled a cellphone and a chainsaw to chop fallen tree limbs in his yard yesterday, his company had several tankers and cargo ships waiting at the mouth of the Mississippi with loads of grain and steel.

Mr. Duffy, 64 years old and a longtime veteran of Gulf Coast shipping, predicted his company and others would soon be cleared by maritime officials to move their goods other than by docking at ports. When the river was temporarily blocked after Hurricane Betsy in 1965, he says, the company used launches to get longshoremen out to cargo ships to unload stuff onto barges. Today his staff has been diverting crude oil and other vessels to Galveston, Texas and Tampa, Fla. He says he isn't worried shipping will be stymied long. "We have some ingenious people in this industry," he says. Others aren't so sanguine. Grain exporters such as Cargill Inc. prefer to move as much grain as possible along the Mississippi because barges are typically cheaper, albeit slower, than railcars or trucks.

Cargill has 300 barges of grain, fertilizer and salt stranded on the lower Mississippi, but faces a nearly impossible challenge finding space elsewhere. One river barge can hold 55,000 bushels of grain, an amount that would fill 15 railcars and 60 semitrucks. "There really aren't any good alternatives," said David Feider, a Cargill spokesman.

Ingram Barge Co. in Nashville, Tennessee, is dealing with a different problem: Only about half of its workers have showed up at its big operation near the base of the Mississippi, where it dispatches towboats and barges transporting coal, grain and chemicals. So tomorrow, Ingram plans to start moving down the river the first of three "crew barges," a sort of floating dormitory capable of housing up to 40 workers.

Ingram operates a sprawling barge fleeting and loading dock in Reserve, Lousiana., about 40 miles upstream from New Orleans. This has become a giant barge parking lot, since barges can't unload or load anything. There was little damage to the facility, but Ingram has notified customers that it won't load any more grain or other shipments until the port reopens.

By closing the New Orleans ports, Katrina effectively eliminated the cheapest way for American industries in the nation's heartland to do business overseas. Some economists figure that the competition of the river-barge industry with the railroads and trucking companies saves companies roughly $1 billion annually.

Agriculture-industry officials say other U.S. ports simply don't have the capacity to absorb the two billion bushels of grain that move annually through New Orleans. "The ports in the rest of country are already at capacity," said one federal official.

At Archer-Daniels-Midland Co., the commodity-processing giant in Decatur, Illinois executives are optimistic that New Orleans will reopen for business within weeks. But for now they're studying railroad maps to see how much of Midwest crops they could divert to ports on other coasts.

Lew Batchelder, ADM senior vice president of agricultural services, said that if ADM's four grain terminals near New Orleans remain idle, the company has the capacity to divert some grain by railroad to its facilities in Galveston and Corpus Christi, Texas. ADM already uses the rails to ship large amounts of crops to ports along the Pacific Northwest for export to Asia.

The problem for the grain industry is that executives have little idea whether the railroad companies, which are already running at a high level of capacity, have the space to carry much of the grain that normally would move by barge to New Orleans. Some industry officials are guessing that perhaps one-fifth of the grain that normally moves through New Orleans could move to other U.S. ports for export.

New Orleans also is a big rail center where lines from the East, West and North connect. Freight that normally travels through New Orleans between Eastern and Western railroads was being rerouted through other rail gateways north of the hurricane-damaged area.

Century Aluminum, of Monterey, Calif.ornia hauls 2.4 million tons of bauxite per year to a plant in Gramercy, Lousiana., where the ore is refined into alumina that is then hauled to the company's smelting plant in Kentucky, where it's made into aluminum.

Company spokesman Mike Dildine said the Gramercy plant survived the storm without major damage but the company has no other practical way to move the ore to Kentucky except the river. He said he heard that the river could soon be open to barge traffic but that the company expects it to move slowly because of barges lost in the river.

"Even if traffic has opened up," says Mr. Dildine, "I still think there are going to be some bottlenecks."

Mr. Snider, the banana transporter, said he can't decide whether he should design an entirely new route structure around Texas deliveries or wait to see if Gulfport starts operating again. He would rather wait if he could. Because his drivers live strategically along the route to Gulfport, switching to Texas could require him to hire a new work force. [ September 2, 2005 ] Timothy Aeppel and Scott Kilman contributed to this article.

'300 BARGES BELONGING TO CARGILL HOMELESS ON THE MISSISSIPPI RIVER SYSTEM

ALEXEI BARRIONUEVO AND CLAUDIA H. DEUTSCH, NEW YORK TIMES: As ports remained closed from Louisiana to Florida on Wednesday, some 300 barges containing grains and other products were left homeless.

Under the management of Cargill, a large agriculture producer and exporter, the barges were caught in a bottleneck caused by the devastation of Hurricane Katrina. Now they are floating on rivers north of New Orleans with nowhere to go.

Two days after one of the worst storms ever ravaged the Gulf Coast, large parts of the nation's distribution system were feeling the effects. Major transportation arteries were clogged, and imports and exports had slowed to a crawl. The logistical logjam could delay the production of hundreds of everyday products. The result is that consumers, even those far from the storm's epicenter, might have to pay more for everything from coffee and bananas to paint and tires.

Many of the Cargill barges, for example, were loaded with corn, soybeans and wheat, for shipment out of the country, before the storm struck early Monday.

With the harvest season for grain less than a month away, grain processors said they were concerned over how long shipping would remain constrained before they must begin their busiest export time of the year, to Europe and Asia.

Grains are the largest export likely to be affected by the devastation to the ports, because they are so dependent on the river barge system. In July, about half of the country's grain exports were shipped from the Mississippi River gulf outlet, said David D. Lehman, managing director for commodities at the Chicago Board of Trade. "Those facilities are all without power and could be impacted by the flooding," he said.

"If this is a five to ten-day problem, it won't significantly impact the grain markets," Mr. Lehman said. If it is longer, then importers will start switching to buying from other ports, mostly likely along the West Coast.

But with gasoline and diesel prices being sharply affected by the loss of refining capacity caused by the storm, shifting to other ports will create costly logistical complications that will probably be passed to consumers in the form of higher prices, shipping firms said.

David Feider, a spokesman for Cargill, said it was "not feasible" to divert grain shipments to trucks or trains because of the high cost and the loading infrastructure required.

Imports are not faring any better. Shippers were scrambling to arrange alternative ports for incoming shipments of oil, chemicals and steel additives. Millions of pounds of coffee remained in storage in New Orleans. "Everything is at a standstill right now," Mr. Feider said.

Government officials struggled Wednesday to assess the scope of the damage to the port of New Orleans.

Coast Guard officials said that they were finishing underwater surveys of shipping channels. So far they have found an unusual amount of soil and sand build-up, and a number of buoys and other navigational aides either missing, destroyed or misplaced, creating the potential for ships to run aground, said Petty Officer John Miller, a Coast Guard spokesman. Some ships struggled with the question of whether to divert to other ports.

The Port of Houston Authority said it was receiving inquiries from carriers about possible diversions. A cargo ship laden with rubber and timber, originally slated to make calls at New Orleans and Pascagoula, Mississippi, was diverted to Houston Wednesday night, the port authority said.

Chiquita Brands International said it had no choice but to reroute shipments of bananas and other fresh produce to ports like Freeport, Texas, and Port Everglades, Fla. Chiquita's facilities in Gulfport, Mississippi, which last year handled about 25% of its banana imports to the United States from Central America, were too damaged to receive shipments, the company said.

Meanwhile, companies struggled to get products out of New Orleans. More than 700,000 bags of coffee, each weighing 132 or 150 pounds, remained in storage in New Orleans, said the Chicago Board of Trade.

Procter & Gamble said it suffered a heavy loss of coffee production. About half of its Folgers brand of coffee comes out of New Orleans. The facility has been shut since Saturday, and Doug O. Shelton, a Procter spokesman, said the company had no idea when it could reopen. "We're still in the process of trying to re-establish contact with the people who worked in the area," he said.

In recent years, ports in Long Beach, Califfornia and in the Pacific Northwest became so congested that some companies began importing container shipments of consumer products directly from Asia to gulf ports to more easily distribute to customers in the South and Midwest.

Wal-Mart opened a mammoth distribution center outside Houston this summer as part of a direct-import strategy. Christi Gallagher, a spokeswoman for the company, said that while two distribution centers were affected by the storm, the Houston facility and Wal-Mart's many other distribution centers spared the company any major disruptions.

Others were not so lucky. Damage was so heavy at one of DuPont's largest titanium dioxide plants, which supplies whiteners and brighteners to paint and coatings manufacturers, and to a plant that makes a chemical precursor to the polyurethane foams used in car dashboards and appliances, that the company has invoked legal clauses used to shield itself from liabilities when it inevitably has to renege on some supply contracts.

"It's too early to say how much we've lost, but we've had extensive flooding," said Kelli Kukura, a DuPont spokeswoman.

Truckers are also feeling the effects. Shipments in and out of the New Orleans region represent about $1 million a day for Yellow Roadway, a $10 billion trucking company, "and since commerce in the area has pretty much stopped, it will affect those revenues," said William D. Zollars, the
chairman.

But Mr. Zollars is more concerned about costs than revenues. Yellow Roadway has 20 terminals in the area. "Our terminal in New Orleans has been reduced to a concrete slab, and with communications so bad, we don't know how much damage we've had at others," he said. [ September1, 2005 ] Alexei Barrionuevo reported from Chicago for this article and Claudia H. Deutsch from New York. Jeff Bailey contributed reporting from Chicago, and Melanie Warner from New York.

DEVISTATION TO RURAL COMMUNITIES BY KATRINA DIFFICULT TO DEFINE

SOUTHERN HELP MUTUAL ASSOCIATION:As news organizations and government officials struggle to define the extent of the catastrophe in New Orleans, the story of Hurricane Katrina's devastating effect on rural communities remains even more difficult to define.

The press has understandably focused its attention on the New Orleans urban area and some larger communities along the Gulf Coast. But thousands of residents of rural southern Louisiana remain cut off, and their condition is unknown.

The Southern Mutual Help Association in New Iberia, Louisiana, is part of the 80-55 Coalition for Rural America. Executive Director Lorna Borg, a veteran of the rural community development movement and a strong voice for rural America, said she is very concerned about the status of rural residents of south Louisiana. Today she attempted to take a reporter into the region to learn more.

We wanted to share with you information Lorna sent us yesterday from New Iberia, Louisiana.

"Fishers and family farmers already under the stress of international trade agreements have now lost homes and the very means of creating a livelihood to recover. Many rural small businesses are destroyed. The crops in many areas are gone --- cane, citrus, soybeans. The fisheries are destroyed in large areas of Louisiana's coast. This is a crisis for small farmers, farm workers and fisher families.

"SMHA knows from our lengthy recovery from hurricane Andrew in August of 1992 that rural areas are last and receive the least. SMHA is still assessing the situation of directly impacted rural communities and families. We already know the Acadiana region around Lafayette will have approximately 150,000 refugees looking first for where to be for the time away from their homes (likely to be lengthy),and secondly how to possibly recover and rebuild their future." [ September 1, 2995 ]

KATRINA ROTTEN TO THE CORP.

EVAN JINES, COUNTERPOUNCH: The overnight transformation of a vibrant social ecology that was New Orleans into a post-historic wasteland has led to an explosion of opinion. Could it have been prevented, or at least the damage inhibited?

It transpires that there were fears of the prospect of this event and that there were attempts to head it off by preventative action. But the necessary funds had been cut, siphoned off to pay for the spreading of freedom and democracy in Iraq.

Most of us discover for the first time under what makeshift conditions the fabulous city of New Orleans had carved out its pulsating livelihood. A city sitting below sea level, hemmed in by Old Man Mississippi and the higher Lake Pontchartrain (still in the lingo of the impecunious French from whom the Yanks picked up a bargain after 1803 for a mere $15 million) on the other side.

This is a story of the confluence of some gargantuan currents. The long term victory of man over nature; the short term arrogance, criminality and criminal neglicence of a junta in office, and the long term revenge of nature over man.

In the US, the long term ascendancy of man over nature is embodied in one institution in particular --- the US Army Corps of Engineers. This body keeps appearing in the stories.

In short, the Army Corps asked for some dough to patch up a city under obvious threat, and Washington deemed that there were higher priorities.

But who or what is this thing called the Army Corps of Engineers? Below I reproduce a potted history, written some years ago for the edification of American engineering students.

The U.S. Army Corps of Engineers is an institution unique in American history. The Corps is of interest not merely because of its size (it is the largest engineering and construction organization in the world), but because it presents a significant anomaly --- how could a country pervaded by a culture of 'free enterprise' and civic autonomy sustain an arm of the military with substantial domestic responsibilities for activities of a social and economic character? The history of the Corps provides a 'window' into the complex development of the US itself.

The United States Army Corps of Engineers had its origins in 1775 as a vehicle for erecting the physical infrastructure of war. It was permanently organized in 1802 to provide such facilities on a continuing basis. After 1824, the Corps' role gradually expanded into civil works projects. Internal waterways were the arteries of domestic commerce. Their spatial expanse and the multiplicity of their functions and associated problems gave them an intrinsically public character.

Population growth and economic development meant an inevitable expansion of government involvement, and gradually the federal government assumed greater responsibilities. As early as 1824, the Supreme Court declared that federal authority to regulate commerce extended to interstate navigation. The Corps was assigned responsibility for waterway management as a matter of course. The young country was similar to that of France, whose corps of engineers developed military and civic infrastructure as a matter of public duty.

The U.S. Corps and West Point (from whose top graduates Corps personnel have been sourced) were both started with the assistance of French engineers. Much early American engineering was 'French' both in its conceptual orientation and highly theoretical training, and in its culture of civil works being overseen by state officials for the broader public good.

The massive Mississippi system presented the major problems and the major arena of activity, and of conflict over the Corps' role. Few non-engineers have ever confronted the scale and complexity of the technical problems that had to be solved to 'tame' the Mississippi system for large-scale navigation and dense settlement of its hinterland.

The Corps' monopoly on advice and management of water resources was increasingly challenged in the latter half of the nineteenth century. The number of educational institutions increased dramatically, and the number of formally-trained engineers grew exponentially. Rapid industrial development fostered a growing private demand for engineers, a demand that was partly met by engineers with a British-style 'learning on the job' training.

Yet a steady stream of legislation decreed continuing public involvement in water management. Congress also dictated that the Corps continue to be the central instrument for this process. After 1910, the Corps was permitted to hire civilians to manage its growing list of projects, but the strong culture (born of an elitism and meritocratic hiring practices) was carried over from its military ancestry.

Initially concerned primarily with survey work, the central formal responsibility of the Corps became the 'navigability' of waterways. Inevitably, multiple inter-related responsibilities were acquired. With each step of the federal government's pragmatic acquisition of greater influence over the nation's economic life, the Corp's enhanced role followed.

Important steps in this process were the post-Civil War Republican Party's assertive action on civil works programs to hasten industrial development; the influence of turn-of-the-century Progressive Movement politics that stimulated 'multi-purpose' waterway policies (flood control, hydropower, water supply, etc.); the post-World War I demand for electric generating capacity; and the 1930s propensity for public works projects for unemployment relief, as on the massive Tennessee Valley Authority hydroelectric scheme.

The threat of total war resulted in the Corps being handed the organisational responsibility for development of the atomic bomb. The Corp's Brigadier-General Leslie Groves was put in charge of the Manhattan Project, dictating deadlines to the physicist geniuses underneath him.

Inevitably, because of its size, experience and military roots, the Corps also became an instrument of U.S. foreign economic policy, designing and overseeing construction projects overseas --- involvement in the construction of the Panama Canal was symbolic of this role.

In spite of this expansion, flood control came to be the Corps' dominant domestic responsibility. Expanded responsibility often came after a major disaster (as in 1927 and 1935), which stimulated a pragmatic Congressional response. By the 1940s, multi-purpose dam construction came to be a major part of Corps activity.

Nevertheless, the Corps generally remained narrowly focused on projects --- ports, bridges, dams, etc. Even in terms of flood control, the Corps long remained attached to levee construction and opposed to dams as the preferable form of control.

The Corps has survived the criticisms of regional planners, who claimed that river basins were an arbitrary basis for infrastructure development, of social planners who wanted to incorporate social indicators into development planning, of economists who wanted more rigorous cost-benefit evaluations of the planning process, and of political scientists who wanted to imposes rigorous rational methods of administration. The continuity in the Corps' focus is probably driven by a deeply entrenched 'engineering' culture, but it has also been facilitated by a utopian dimension in the ambitions of its critics.

Post-World War II population growth meant continuing demand for Corps projects, and Congress used the Corps for developmental purposes. By the 1970s, Corps activity had been slowed --- by procedural changes in project planning, by federal budgetary constraints that led to impasses over cost-sharing, and by community opposition to Corps priorities.

There had always been community conflicts over land use, but environmental concerns now loomed large on the political agenda. Symbolic of the era was the 1969 National Environmental Policy Act, which among other things required all federal agencies to consider the environmental implications of their activities.

The Corps revised its decision-making and consultative processes and its project evaluation techniques. Ironically, the Corps itself became a key instrument in the furthering of environmental concerns. The River and Harbor Act of 1899 (the 'Refuse Act') gave discretion to the Secretary of the Army (effectively the Corps) over the discharge or deposit of refuse.

The Federal Water Pollution Control Act Amendments of 1972 reinforced this role; and several judicial decisions in the early 1970s effectively gave the Corps jurisdiction over the entire water mass of the United States, placing wetlands protection within the ambit of the Corps' responsibilities.

The use and control of water resources has been an essential part of American economic life and the Corps of Engineers has taken a central role in the development and management of those resources. In a country so profoundly imbued with an ethos of 'free enterprise,' it is salutary to discover that an arm of government has played such an important role in American development. That role has continued because governments and communities have continued to designate key resources as possessing a public or social character. The Corps as a public institution has retained legitimacy as a vehicle to develop and manage such resources.

That was then; this is now.

The Army Corps of Engineers is the quintessential embodiment of its time. And that time may have been extended with the judicious allocation of resources to continue the project in this most vulnerable of human settlements. But judiciousness is a non-existent commodity in the current administration. As a consequence, the Army Corps of Engineers' time has come.

The history of the Corps is invaluable because it brings out a salient feature --- the entire river system, a mighty edifice, has been cajoled against its will into serving its ravenous human overlords. The catastrophe at the mouth of the system is a symptom of the intolerable pressures on the system in its entirety.

One statistic stands out above the details of the human suffering. The water temperature in the Gulf of Mexico is reported as being 30 degrees Centigrade. This is the mark of nature's long term revenge over man. [ September 2, 2005 ]

AGRIBUSINESS HURRICANE REPORT

THE FOOD INSTITUTE DAILY REPORT

SEPTEMBER 1, 2005

Wal-Mart Stores Inc. reopened more than 70 stores after Hurricane Katrina forced it to shutter 126, while about 50 stores remain closed Whole Foods Market, Inc. said there has been property damage and product loss in its stores in Louisiana and Florida in the aftermath of Hurricane Katrina. The company estimates a sales impact on the fourth quarter, which began July 4, 2005 and ends Sept.ember 25, 2005, in the range of $5 million to $6 million.

Children's Hunger Fund is supplying truckloads of emergency food and supplies to hurricane victims in the Gulf States. Product donations are needed in this desperate time. Bottled water, MREs, staple foods, dry goods, medicine and medical supplies, tools, and any other emergency items are needed right away!

AFC Enterprises, Inc. estimates that there are 95 to 100 closed Popeyes restaurants due to storm damage, loss of electricity and flooding from Hurricane Katrina. The closed restaurants are primarily along the gulf coast of Alabama, Mississippi, and in the New Orleans area.

Sanderson Farms Inc. said initial reviews have not shown significant damage to its Mississippi facilities following Hurricane Katrina. The chicken and prepared food producer said power was restored to its facilities in Laurel, Hazelhurst, and Jackson, Mississippi and operations are expected to resume by the end of the week at those locations. The company said it expects its Collins, Mississippi, facility to return to operations by early next week.

Coffee prices at New York commodity markets rose the most in six months, and prices gained in London, after flooding caused by Hurricane Katrina put at risk inventories of beans in New Orleans, the second-largest coffee port in the U.S. Analysts said this increase will eventually hit consumers with high prices.

Darden Restaurants Inc. has at least 25 restaurants affected by hurricane Katrina, and four of those restaurants were severely damaged, according to preliminary reports, said Darden spokesman Mike Bernstein, reported Orlando Sentinel.

A prolonged shutdown of New Orleans will force farmers and agriculture companies to find more expensive transportation, such as railroads and trucks. As a result, companies from farmers to large agribusinesses like Cargill Inc., Bunge Ltd. and Archer Daniels Midland Co. will feel the economic pinch.

Flowers Foods Inc.'s New Orleans bakery is closed because of the impact of Hurricane Katrina. The company will reopen a shuttered bakery in Houston to help serve the region. Close to half of the company's 24 warehouses in the Gulf Coast region are unable to operate, due to the storm.

SEPTEMBER 2, 2005

The National Association of Convenience Stores' Executive Committee unanimously approved the relocation of the NACS SHOW 2005 from New Orleans to Las Vegas on November 15-18.

PepsiAmericas reported that preliminary assessments of its facilities in Louisiana indicated minimal damage as a result of Hurricane Katrina. PepsiAmericas has one production facility and four distribution facilities in the affected areas of Louisiana.

A total of 14 Chili's Grill & Bar, Romano's Macaroni Grill and On The Border Mexican Grill & Cantina locations in Louisiana and Mississippi remain closed due to Hurricane Katrina. The 14 restaurants represent approximately 1% of annual revenues for Brinker.

The first assessment of New Orleans' port conditions indicated it might be next year before cargo movement returned to normal there and upriver at the even bigger Port of South Louisiana.

Coffee industry experts predicted that the loss of the tens of thousands of tons of coffee stored in New Orleans would take a year to replace. Coffee contracts have risen 11% this week in New York trading.

Although grain exporting slowed dramatically due to Hurricane Katrina and related flooding stalled barges in the Mississippi, Dan Bosse of Chicago-based AgResource, said, "In ten or 15 days, we're going to be back to 80 or 85% capacity. The worst is already over."

Winn-Dixie has 153 ongoing operating stores in Louisiana, Mississippi and Alabama, and 37 stores in the area are closed due to Hurricane Katrina. Of the closed stores, 33 are in Louisiana and four are in Mississippi.

Hurricane Katrina left hundreds of fast-food restaurants closed or damaged in its devastation. Some 200 McDonald's Corp. restaurants remained closed in the storm's path as of midday August 31. Burger King Corp. said about 120 of the 180 restaurants initially hit were still closed.

Consumers can expect higher prices for chicken, as it may be months before farms and production facilities in the U.S. Gulf Coast states fully recover from Hurricane Katrina, food analysts and industry experts said.

SEPTEMBER 3, 2005

Katrina severely damaged the Gulf's shrimp and oyster fisheries, said the National Fisheries Institute Wal-Mart was working feverishly to reopen about 65 stores.

Chiquita Brands International Inc.'s port facilities in Gulfport, Mississippi, were severely damaged by Hurricane Katrina, but it does not expect costs tied to the damage to be material. Ports in Texas and Florida will handle shipments originally scheduled for Gulfport for the foreseeable future.

Thousands of acres of southwest Alabama peanuts, soybeans and cotton remained flooded August 30, but clear, dry weather in the days after Hurricane Katrina could help area farmers salvage their crops, according to state agricultural officials.

Coffee prices and supplies will be negatively impacted by Hurricane Katrina because New Orleans accounts for about a sixth of the nation's coffee storage.

Tyson Foods Inc. said power outages caused by Hurricane Katrina have halted operations at its four chicken-processing plants in Mississippi.

Hurricane Katrina interrupted farm shipments through New Orleans, where more than half of the nation's grain exports depart for overseas.

Hurricane Katrina caused an estimated $427 million worth of damage to South Florida's agriculture. Most of the losses, however, were to the nursery industry. About 70% of South Florida's avocado crop was ruined.

Preliminary reports indicate that there was no substantial damage to Imperial Sugar Company's cane sugar refinery or warehouse facilities in Gramercy, Louisiana.

SEPTEMBER 6, 20005

Nearly ten percent of the New Orleans labor force, about 55,000 people, worked in the city's estimated 3,400 restaurants and while some are planning to reopen as soon as possible, others question when the tourist trade can resume.Various services have been set up to assist the city's now unemployed restaurant workers.

A Texas Cooperative Extension economist said consumers could see temporary food price increases if the port of New Orleans is closed for an extended period.

Performance Food Group said the effects of Katrina are primarily impacting two of its broadline distribution centers, located in Houma, Louisiana and Magee, Mississippi. While both facilities experienced temporary disruption of power and some moderate inventory loss, both facilities are now operating and serving their customers to the extent possible. At the present time, the efforts of the Federal Emergency Management Agency are requiring utilization of a significant portion of capacity in the Magee, Mississippi facility.

Ruby Tuesday Inc.'s restaurants in Biloxi and Gulfport, Mississippi, were destroyed by Hurricane Katrina. The company's Moss Point and D'Iberville, Mississippi, locations were damaged and remain closed, but it expects them to reopen in a few weeks.

About 131 of Dollar General Corp.'s stores, or about 1.7% of its total stores, remained closed due to Hurricane Katrina. Some of the stores may have been destroyed, the company said.

Wal-Mart Stores Inc. said that 18 stores still remain closed in the wake of Hurricane Katrina.

Compiled from The Food Institute Daily Report, One Broadway, Elmwood Park, New Jersey 07407

FLOOD CONTROL

"It appears that the money has been moved in the president's budget to handle homeland security and the war in Iraq, and I suppose that's the price we pay.

Nobody locally is happy that the levees can’t be finished, and we are doing everything we can to make the case that this is a security issue for us."

-- Walter Maestri, emergency management chief for Jefferson Parish, Louisiana;
New Orleans Times-Picayune, June 8, 2004.

FUNDING FOR UPGRADING NEW ORLEANS' LEVEES DENIED FOR 3O YEARS

GREG GORDON, MCCLATCHY NEWSPAPERS: Former officials of the Army Corps of Engineers got a sick feeling last week as two levees collapsed and floodwaters from Hurricane Katrina surged across New Orleans.

Corps engineers had known for years that the mostly earthen levees holding back Lake Pontchartrain were designed to protect the city from a weak Category 3 hurricane --- not a Category 4 with Katrina's punch.

The city's defenses had been further weakened because federal funding shortfalls had delayed for 30 years completion of a project to raise the levees' height.

The result: one of the worst natural disasters in U.S. history.

Mike Parker, who was forced to end his brief reign as head of the corps in 2002 after publicly criticizing the Bush White House for cutting his budget requests, said more funding in recent years might have reduced the flooding. He blamed bureaucrats in both Democratic and Republican administrations for cuts.

"I wish I had understood a little bit better and could communicate to people what needed to happen," he said. "Unfortunately, they're learning now."

Congressional Democrats and other critics have assailed Bush for slashing by tens of millions of dollars the corps' requests for upgrading the levees while spending billions of dollars in Iraq. The president fueled the criticism when he told ABC, "I don't think anyone anticipated the breach of the levees."

Lt. Gen. Carl Strock, now the Army Corps' chief of engineers, later acknowledged that his agency has long "understood the potential impact of a category 4 or 5 hurricane" on New Orleans. Strock defended its decision not to shift funding from other corps projects, calling a hurricane of that magnitude a low-probability, "200- to 300-year event."

"How does that make any sense?" asked Joseph Suhayda, a Louisiana State University engineering professor who worked part time in the corps' New Orleans office from 1996 to 2000.

After Hurricane George sent a scare through the city in 1998, Suhayda said, he proposed a plan to create a "community haven" by installing 12 miles of flood barriers shielding the city's business district and providing emergency shelter to residents. He said the corps paid for a study, but the project wasn't funded.

"You could have done it in one year," he said. "The breach that occurred in one corner of the city basically spread throughout the whole city. Why?"

He said his proposal would have cost up to perhaps a few hundred million dollars. Now, Suhayda said, "we're going to spend ... a hundred times the amount of money, and with all this human suffering."

Fred Caver, who retired in June as the corps' deputy director of civil works, said engineers concluded in the late 1980s or early 1990s that the levee system "was not the best engineering choice." It would have been better, he said, to build a towering, gated barrier that would block a storm surge from the Gulf of Mexico into Lake Pontchartrain.

Parker and Caver said decisions to defer spending on levees must be placed in the context of huge demands on the corps for navigation improvements, many affecting the nation's ability to compete on world markets.

"In this particular instance, we took a risk as a nation, and we lost," Caver said. [ September 5, 2005 ]

NOT NICE TO FOOL MOTHER NATURE; SCIENTISTS CALL FOR MASSIVE EFFORT TO RESTORE BARRIER ISLANDS AND MARSHES

GLEN MARTIN, SAN FRANCISCO CHRONICLE :The catastrophic flooding of New Orleans was long predicted by scientists, and researchers are now promoting a way to avoid similar disasters in the future --- a Manhattan Project-style effort to restore the barrier islands and vast marshes that once protected the city from the sea and storms.

Scientists note that over a period of 7,000 years, the Mississippi River created a huge delta that sheltered the region now supporting New Orleans from storm surges.

But the delta --- and its wetlands and islands --- have been steadily shrinking since 1930, thanks to river diversion projects that have prevented the river from depositing silt and sand at its mouth. Instead, the sediment has been directed further offshore, beyond the continental shelf.

To ensure that a catastrophe like Katrina won't be repeated, say scientists, a significant portion of the old system must be reconstructed.

"New Orleans won't be safe from another storm like Katrina until we restore this hurricane buffer," said Robert Twilley, a professor of wetland science at Louisiana State University and the leader of a team overseeing a $2 billion marshland rehabilitation project in the state.

"But protecting New Orleans will take a lot more than $2 billion," said Twilley.

"A very rough estimate is $14 billion," he said.

Prior to the European settlement of the area, about 3.6 million acres of marsh and an extensive system of sandy offshore islands surrounded the mouth of the Mississippi River, protecting inland areas from the worst effects of storm surges and waves, said Twilley.

These marshes and islands were the direct handiwork of the river, which continually dumped sediment into its delta, Twilley said.

The Mississippi's outlet would shift over time, from east to west and back again, constantly building up new islands and wetlands with the sand and silt harvested during the river's course through North America.

"Wetland loss was part of the process, but it was always accompanied by wetland gain," Twilley said.

But this ecological dynamic began changing in the 1900s, Twilley said.

Levees were built around New Orleans after a disastrous 1927 flood, and an extensive canal and levee system was dug throughout the delta to accommodate navigation and oil development through the 1940s. The Mississippi River was basically channelized, and its sediment load directed off the continental shelf.

The wetlands and barrier islands began withering away. More than one million acres have been lost since 1930. Scientists predict another 300,000 acres will disappear by 2050 if the trend isn't reversed. And with each acre lost, said Twilley, the threat to New Orleans is increased.

The consequences of wetland and barrier island loss have been clear to scientists for some time. Detailed scenarios of a major hurricane hitting New Orleans --- many eerily similar to what transpired with Katrina --- have been published in both the popular and scientific presses at least since the early 1990s.

"By the early 1970s, we knew the diagnostics of how the system was changing," Twilley said.

Now, Twilley said, scientists are ready with a "prescription" to reverse the trend: reconnecting the river to its historic delta, removing some canals and other artificial structures, distributing dredge spoils so that wetlands and barrier islands once again emerge from the gulf waters.

Such a restoration would have benefits other than surge control, scientists say. Specifically, it should bolster the region's important seafood industry. Gulf wetlands are critical nursery areas for a wide range of commercially important marine species, including shrimp, blue crab, oysters, redfish, menhaden and weakfish.

Some research indicates that storm surge in adjacent inland areas is reduced by 1 foot for every square mile --- 640 acres --- of wetland that is restored. Gregory Stone, the James P. Morgan professor of coastal geology at Louisiana State University, said a sufficiently ambitious project would have a dramatic effect on New Orleans and its environs.

"We've undertaken lots of storm surge computer simulation during the last five years, and we've proven the effect of (restored islands and marshes) in retarding storm waves and surges," Stone said.

"We also have data that conclusively shows the Louisiana coast becoming more vulnerable every year if we don't bolster marshes and islands," he said.

Restoration could be challenging from an engineering standpoint, Stone acknowledged. The Mississippi Delta is a dynamic and complex environment, and it remains unclear if sufficient raw materials are at hand.

Most pointedly, the Mississippi is no longer the Big Muddy of yesteryear. Upstream diversions, development and channelization have greatly reduced the amount of sand and silt carried by the river.

"We can use diversion structures to redirect sediment (coming down the river) that is now going off the continental shelf," said Scott Faber, a water resources specialist with Environmental Defense, an environmental group active in Gulf of Mexico wetland restoration.

"Unfortunately, the amount of sediment carried by the river is less than 50 percent of (historic) levels," he said.

Jim Tripp, the general counsel for Environmental Defense, said the use of diversion structures could be augmented in the short term with sand dredged from offshore areas. But scientists caution that it is unclear just how much sand is available.

"We're not sure of the amount of sand resources off our coast (that can be exploited)," Stone said, "and that's a critical issue. This isn't just a beach-replenishment project. This would be a complete restoration of these barrier islands, a matter of substantially increasing their three-dimensional geometry so they can really do something to retard surge and erosion."

Researchers must also figure out how to accomplish the restoration without affecting local industry, Twilley said.

"We have to do this in the context of sustaining economic activities --- oil and gas, commercial fishing, shipping, fresh water deliveries," he said. "It won't be an easy task."

Currently, Twilley and other scientists are involved in a limited island and marsh restoration project in Louisiana. Bills are now before the U.S. House of Representatives and Senate to continue funding the project --- which has been in place for a decade --- for an additional 30 years at the current rate of $50 million annually.

But to accomplish the degree of restoration needed to truly protect New Orleans, Stone said, an exponential increase in funding would be required --- about $500 million annually for the 30-year period.

Faber compared such an effort to the Manhattan Project or to putting a man on the moon, and urged for approval of the accelerated funding.

"Congress hadn't planned on providing funds to resolve all the scientific uncertainties this year," Faber said. "But if we don't want to see a repeat of this disaster, the restorations we thought might take decades must now be completed in years." [ September 5, 2005 ]

GREAT CULINARY DELIGHTS OF NEW ORLEANS FEARED LOST TO KATRINA

PHIL VETTEL, CHICAGO TRIBUNE: Jimmy Bannos can't stand to watch. But he can't look away, either.

"I'm glued to the TV," the Chicago restaurateur said. "I'm ripped up. New Orleans changed my life."

New Orleans is considered one of the great culinary cities of the world, and there is fear that some of the restaurants that made New Orleans' reputation have been washed away by Hurricane Katrina.

"We were in the restaurant business, but it was a diner on the seventh floor of the Garland Building," Bannos recalled. "But then I got Paul Prudhomme's cookbook, and it inspired me. I flew down to New Orleans and met Prudhomme, and Frank Brigtsen was in the kitchen then. They opened their arms to us."

Bannos began adding Cajun and Creole specials to the menu, and they quickly became his biggest sellers. "The Reuben sandwich [orders] kept shrinking, and the oyster po' boys kept growing."

Now Bannos' Heaven on Seven, with its city and suburban sequels, is Chicago's best-known New Orleans-style restaurant. Bannos was traveling to the Big Easy six times a year to keep in touch. But now, Bannos has no idea when he might be able to return.

And neither does anybody else.

"I just heard from the operation guy at Emeril's," Bannos said. "He doesn't know anything about the condition of the restaurant."

Susan Spicer, whose Bayona restaurant is one of the most acclaimed in the French Quarter, figures everything in her restaurant is gone.

"From what I know, there are at least 5 feet of water in the streets now," Spicer wrote in an e-mail from Jackson, Miss. "Which means most of our equipment will be ruined. And although we have our 8,000-bottle wine collection in the attic, with 100-degree temperatures and no climate control, that is also lost."

When the Brennan family abandoned its New Orleans restaurants to evacuate, it took a "shotgun approach," according to Brad Brennan, who runs the family's Las Vegas re-creation of Commander's Palace.

"We sent different members to different cities --- Shreveport, Jackson, Memphis, Houston--so if the hurricane wasn't so bad, some could double back and protect the restaurant," he said. "It was a brilliant idea; we never thought the hurricane would get to this level.

"Luckily, our chief financial officer was already in Vegas with me," Brennan said, "so she was able to get the payroll out. This is why I keep beating on the staff to go with direct deposit; they can get their money from the nearest branch office."

The Brennan family owns ten restaurants in New Orleans, but most of its collective concern centers on the group's crown jewel --- Commander's Palace.

"We don't know what's going on," Brennan said. "One small blessing is that the TV cameras aren't showing it [Commander's Palace]. If they're not showing it, it must not look horrible. I think TV would focus on disaster, and because they're not showing Commander's Palace, maybe the damage is limited."

The Los Angeles Times reported that half of Commander's Palace's facade had been blown away, but Brennan said it remained unknown whether there is interior damage, and that would be a bigger problem.

One certainty, Brennan said, is that the family can't wait to return to New Orleans.

"I can tell you by what the generation above me is saying, and it's `Rebuild, rebuild, rebuild,'" Brennan said. "We think New Orleans is a viable place, and we want to get back."

"I have no idea what the future holds for fine-dining restaurants down there," added Spicer. "But I believe that somehow, we will band together to keep the food culture alive and well, even if it means feeding emergency, rescue and construction workers on po' boys and red beans for a year or so."

In Chicago, Bannos is organizing a fundraising dinner to be held October 6.

The $50-per-person event will feature food by such local chefs as Gabriel Viti, Scott Harris, Tony Priolo, Patrick Concannon, Tony Mantuano and Martial Noguier, and the list of participants keeps growing. Spicer said she plans to be there. The event is tentatively set to be held in the McCormick Place ballroom.

"New Orleans is in my blood; I immersed my whole soul into it," Bannos said. "Seeing the destruction, looking at Canal Street and Bourbon Street, I wonder if it'll ever be the same. Some of my greatest memories are of times in that town."

Short-term, Katrina's destruction won't hurt Bannos' restaurants.

"We get our catfish farm-raised from Mississippi, so that's not a problem," he says. "We'll have to use East Coast oysters for a while. We'll use West Coast snapper instead of gulf snapper, farm-raised redfish instead of gulf redfish. We don't have to worry about crawfish until the season starts in February.

"You do what you have to do." [ September 2, 20005 ]

LETTER FROM WILLIE NELSON

Dear Friend

For months I have been waiting to tell you the exciting details of our 20th Anniversary concert, our accomplishments and all that you have helped us do for family farmers over the past 20 years. And then, the hurricane struck.

I know that you, like me, are saddened and horrified by the images coming out of the area. The destruction is immense. While attention is rightly focused on the cities and the destruction there, we at Farm Aid know that there are disturbing stories still to come from the rural areas and family farmers.

Farm families by virtue of where they live are sometimes hidden from the mainstream... their stories will come out later. We know that as soon as folks can get to their phones Farm Aid will start receiving calls from farmers about the loss of their crops and their hungry farm animals. We will hear of the destruction of equipment, farm buildings and homes.

Farm Aid is taking action right now! We are activating our Family Farm Disaster Fund --- the basket of hope that can deliver what farm families uniquely need. Farm Aid is the only national organization that can focus exclusively on the needs and problems specific to family farmers in natural disasters. I hope you will join me by making a donation.

Your donation can make the difference for the farm families whose homes and livelihoods are threatened.

I am glad that Farm Aid has been here for 20 years building a strong network of farm groups that know exactly how to get help directly to farm families that need it most!

Over the last few months we’ve been reflecting on these 20 years and all the good Farm Aid has done and all the families we have helped. And then today Farm Aid sent $30,000 directly to the hurricane destruction area. We funded three organizations we have worked with for years. We know they are the farm experts in the region: the Federation of Southern Cooperatives, Louisiana Interchurch Conference and the Farmers Legal Action Group.

On September 18 Farm Aid will host its 20th Anniversary concert in Tinley Park, Illinois. We will all come together for the benefit of the family farmers of America. We know that by this year’s concert date we will already have helped many farmers hurt by Hurricane Katrina.

I’ll be there with my fellow Farm Aid board members Neil Young, John Mellencamp and Dave Matthews. Joining us again are Arlo Guthrie, Susan Tedeschi, Emmylou Harris, Jerry Lee Lewis, Wilco, Supersuckers, Los Lonely Boys, Jimmy Sturr, James McMurtry and Kate Voegele. There will also be some newcomers to the Farm Aid stage-Kenny Chesney, Kathleen Edwards, Widespread Panic, Buddy Guy, John Mayer and Shannon Brown.

Over the past 72 hours, Farm Aid staff have been working to assess the impact of the storm on family farmers and rural communities. What we have learned is what we already knew in our hearts—that the situation is grim. Electricity, water, phone, transportation --- all have been seriously damaged and will take weeks, if not months, to repair.

Crops have been lost, farm buildings damaged, farm animals put under stress or destroyed in the storm and ensuing flooding. There is simply no doubt that serious damage was done to family farmers and rural communities throughout the area hit by the hurricane.

I am proud that you and I can provide the help farm families need. Your gift, $100 or $10, right now will make a big difference to a farm family that was in the path of Hurricane Katrina.

Help us help them.

Stay strong and positive,
\S\ WILLIE NELSON

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