Floods Hit Retailers, Farmers

As the floodwaters that inundated much of the Midwest began to recede last week, they revealed millions of acres of cropland that might never get planted this year, as well as millions of dollars' worth of damage to retail food stores. We've had between four and six stores that have been wiped out or nearly wiped out, Jerry Fleagle, president of the Iowa Grocery Industry Association

DES MOINES, Iowa — As the floodwaters that inundated much of the Midwest began to recede last week, they revealed millions of acres of cropland that might never get planted this year, as well as millions of dollars' worth of damage to retail food stores.

“We've had between four and six stores that have been wiped out or nearly wiped out,” Jerry Fleagle, president of the Iowa Grocery Industry Association here, told SN.

According to reports, the flooding caused at least $1.5 billion in damage in Iowa alone. In addition, many residents did not have flood insurance, Fleagle noted, which could end up slowing down Iowa's heretofore robust economy.

Most of the heavily damaged supermarkets were independently owned, he said, although some Fairway stores were also impacted. In addition, a Save-A-Lot in Cedar Rapids “had about three or four feet of water,” Fleagle said.

“It's a new challenge for a lot of these retailers,” he explained, noting that the last major flood that hit Iowa — in 1993 — didn't cause as much damage to stores. “We've had a lot of calls from our members asking about how to clean up, and what they have to do.”

A spokeswoman for Hy-Vee, which is based in West Des Moines, said the chain's stores emerged largely unscathed. The chain shuttered a gas station that was surrounded by water at one of its stores in Iowa City, but it was keeping its other stores open as of early last week.

“We have four or five other stores very close to areas that have been evacuated, but we are hopeful they will be OK,” said Christine Friesleben, the Hy-Vee spokeswoman. “We have an emergency contingency plan that's been communicated to affected stores, prioritizing procedures to take. Priority No. 1, of course, is people. Everything else — phones, communication systems, accounting records, IT equipment, inventory, security, etc. — comes after that.”

Several Hy-Vee workers were displaced by the flood, she said, and the company was working last week to provide assistance to them.

She said the company did have to do some rerouting of deliveries when Interstate 80 was closed because of the flooding, and the chain had to bring in fresh water from as far away as Texas.

“Cleanup will be massive, and we're working right now to get the most critical supplies — bleach, paper products, etc. — to victims to help in those efforts,” she said.

The flooding also caused Hy-Vee to change the venue for this past weekend's Hy-Vee Triathalon and to eliminate the swimming portion of the event because of high bacteria levels in the flooded bodies of water in the area.

Fleagle of the IGIA noted that some retailers have seen a boost in sales from providing cleanup supplies, and many have made an effort to donate water to the affected areas.

A spokeswoman for Schnuck Markets, based in St. Louis, Mo., said none of its stores were impacted by the flooding, but the five locations it operates in the Rockford, Ill., area “answered the call for additional water and supplies that were needed in that area because of the flooding.”

Marsh Supermarkets, Indianapolis, said that although flooding did occur in some of the towns where the company operates stores, no stores were damaged or closed.

“We have been able to make all of our deliveries, and have actually run some extra trucks into the areas that were affected,” said Connie Gardner, the Marsh spokeswoman.

She said Marsh has been involved in helping to provide food and water to both relief workers and those people who have been displaced by the storms.

“In one area, we provided food and drinks to 60 folks that were in a church when they were evacuated from their homes,” Gardner said. “The food had to be taken over to the church by boat.”

The company is also working with a local radio station to raise money for the Indiana Chapter of the American Red Cross.

At Hy-Vee, the chain also worked with the Red Cross to supply “hundreds of meals” to flood victims and volunteer workers, Friesleben said.

Although Fleagle noted that it is too early to predict what impact the flooding will have on food prices, he said it appears that many fields will not produce any crops at all this year.

“Obviously, there are fields that are still underwater, and it is getting late in the season now, so there is a question about whether they will be able to replant,” he said, adding that the state “could see some decent crops in areas that were not affected.”

“It's going to have some effect on food prices,” he said. “Corn and beans are going to be in short supply, and that's going to drive beef or pork prices higher for the next 12 to 18 months.”

It could be several weeks before the true impact of the flooding on crop production can be predicted, one analyst said last week in a conference call. According to reports, about 5 million acres of cropland have been flooded.

“Nobody can tell you what the full effect of the flooding will be,” said David Driscoll, a food manufacturing analyst with Citigroup. “We will see substantial volatility, with big changes in every little weather event until the end of July,” he said, noting that corn pollination occurs in July.

So far this month, he said, corn prices are up 22%, wheat prices 16% and soy prices 15%.