New Orleans counts cost of Hurricane Katrina

When the levees surrounding the vulnerable city of New Orleans burst under the relentless pressure whipped up by Hurricane Katrina earlier this week, one of the nation's most important food transport hubs was deluged.

Although reports claim it is still too early to fully assess the damage to shipping terminals and other facilities, it is almost certain that delays will be felt right up the supply chain.

The Mississippi River, the cheapest route for the shipping of many crops and other commodities destined for overseas and domestic markets, has become inaccessible in parts. Up to 300 barges containing grains and other products have been left stranded.

Grain processors including Cargill are concerned that with the grain harvest season less than a month away, shipping will remain constrained during the busiest and most important time of the year.

Damage caused by the hurricane is also likely to have a significant impact on the nation's coffee supply. Over a quarter of all coffee stored in the United States is in New Orleans, the second largest stock of coffee behind New York.

The fear now is that floodwater has damaged large quantities of this stock, rendering it useless. This is likely to have a significant knock-on effect on major manufacturers of coffee-based food and beverages.

Such uncertainty has already created bullish prices, with New York commodity markets seeing coffee prices rise the most in six months, a picture reflected on the London-based futures market Liffe.

In addition, vital infrastructure has simply been swept away. Chiquita, one of many businesses to have been caught up in the terrible aftermath of Hurricane Katrina, is shifting its port operations from Gulfport Mississippi, along the coast from New Orleans, to Freeport and Port Everglades after Gulfport was destroyed.

"The city of Gulfport sustained tremendous wind and water damage, and many port facilities, including ours, have been severely affected"​ said Bob Kistinger, president and chief operating officer of Chiquita Fresh.

"While we are still assessing the situation, it is clear that we will need to relocate our services from Gulfport for the foreseeable future."​

In 2004, Gulfport handled approximately one-quarter of the company's banana imports to the United States with weekly shipments from Central America. In the near term, the company plans to utilize Freeport, Texas, Port Everglades, Florida, and possibly other ports to handle shipments that were previously scheduled to Gulfport.

Louisiana's shrimp and oyster industry has also been demolished by the storm and is expected to be out of action for the foreseeable future.

Louisiana Seafood Promotion and Marketing Board executive director Ewell Smith said the impact of the hurricane on Louisiana's $2.6 billion seafood industry "will be severe."​ The region produces 10 percent of the shrimp consumed in the United States and 40 percent of the oysters, putting oyster supplies - and prices - at particular risk.

Imperial Sugar is another company with important facilities in the region. Production at the group's cane sugar refinery at Gramercy, located approximately 20 miles northwest of New Orleans, was suspended on Saturday morning and a thorough damage assessment at the refinery is presently underway.

The devastation has been compounded by significant damage to the nation's energy supplies, which will hamper the speed of reconstruction efforts. About 95 percent of the Gulf of Mexico's oil output was initially put out of service due to storm damage according to the US Minerals Management Service.

Further north, the deluge could bring some unexpected benefits. Hit by summer droughts, the shot of late season moisture could be just what the soybean crop in Indiana needs to finish strongly.

But any positive knock-on effect will of course represent a drop in the ocean as the sheer scale of this disaster - both human and economic - becomes evermore apparent. Over 80 percent of the city of New Orleans remains under water, state infrastructure has been devastated and a thriving food center and transport hub - not to mention a culturally priceless city - has, for the time being, been brought to its knees.