Hurricanes on the Market

The hurricanes we've been seeing on the east coast have done more that damage homes and business. In fact, Florida's crisis will be felt outside its borders. Hurricane Charley did about $150 million dollars worth of damage to Florida's citrus industry alone as it hit the southwest side of the state. Then, Frances rolled in on the Atlantic side of Florida and caused severe damage to areas where grapefruit is grown. The damage from these hurricanes may seem unsubstancial in world terms because after all, it is only one state, right? . . . Wrong! Florida dominates the national and international markets by 75% , bringing in $9.1 billion dollars to its industry.

Currently, Hurricane Ivan is on track for the Gulf Coast with about 155 mile per hour winds. Is damage to the citrus industry still on the rise? How will the world market compensate for this loss? Demand for citrus products will be high, while the supply will be limited, driving up prices. How much will you be willing to pay for orange juice with your breakfast?


Rufio said...

Wow, I knew Florida was a big orange producer, but I had no idea they produced so much. It also never dawned on me that all of these horrible hurricanes were destroying crops. The news only shows what kind of damage there is in residential areas.

I really wonder if orange juice prices will rise though. Either way California Orange producers will definetely be a lot busier. Maybe California producers can pick up the slack and we won't see any changes. It will certainly be interesting to watch and find out.

Dr. Tufte said...

This is a good example for many of you - I want to see less "reporting" (as in the first paragraph), and more "economics" (as in the second). A lot of posts include only the former.

I'm dubious when I hear claims of crop damage like this. No doubt there are crops that are destroyed, and that we can put a value on them at today's prices.

But, what is really important to the farmers is the value of the entire crop at harvest time. While some may have been destroyed, this will raise the price, and it is possible for the revenue of farmers to actually rise from a disaster (this happens routinely with freezes destroying many oranges in Florida in the winter).

Having said that, I heard on the news last night that the biggest agricultural loss will actually be in timber.