EconSouth (Third Quarter 2007)
Mother Nature turned up the heat on the South in the summer of 2007. For the region's large agricultural sector, the long, hot summer was a season of discontent.
The dark red splotches on the U.S. Drought Monitor map vividly depict the experience of the Southeastern United States in the summer of 2007. Like cloudy spots on an x-ray, these patches indicating a lack of rain are foreboding for many of the region's climate-sensitive industries.
Other colors on the map also indicate less severe droughts across the country, but the dark red hovers only over the Southeast (see the map). That color represents a D4-level drought as designated by the maps' authors, a coalition of federal and academic agencies. These organizations include groups within the U.S. Department of Agriculture (USDA), the U.S. Department of Commerce, the National Oceanic and Atmospheric Administration (NOAA), the U.S. Geological Survey, and the National Drought Mitigation Center at the University of Nebraska–Lincoln.
One remarkable characteristic of a D4-level drought is its frequency: only once every 50 years. Areas classified as D4 experience exceptional, widespread crop and pasture losses as well as emergency water shortages.
While the full impact of the 2007 drought won't be known for some time, preliminary information and anecdotes help to identify the industries in the region most affected by this event. Many industries—especially agricultural concerns—were set back by the weather, but a few isolated clusters of businesses benefited from the drought.
Scarce water, blistering heat
The Drought Monitor uses a combination of measurements including soil moisture, stream flow levels, precipitation, and other variables to gauge a drought's impact. Three Southeastern states have particularly suffered.
According to the Drought Monitor, at one time this summer just slightly more than 50 percent of Alabama was enduring the once-every-half-century D4-level drought, and 90 percent of the state endured a D3 or higher drought. D3 conditions are only slightly less damaging than D4, occurring once every 20 to 30 years and featuring major crop and pasture losses and widespread water shortages or restrictions.
Almost one-fourth of Georgia has reached D4 levels while more than 80 percent has been D2 or worse. D2 occurs once every 10 to 20 years and is defined as having crop and pasture losses likely with water shortages and restrictions.
With less than 1 percent of the state reaching D4, Florida was less affected than Alabama or Georgia. However, 95 percent of the state has been hit by one of the Drought Monitor's five drought classifications (D0 through D4), which means crops grow slowly and water deficits linger.
As the Drought Monitor notes, much of the region has implemented a mix of mandatory and voluntary watering restrictions. In Alabama no statewide restrictions exist, leaving municipalities to determine their own strategies. Birmingham implemented mandatory watering restrictions, but most other areas made restrictions voluntary. Georgia enacted statewide restrictions, but five metro Atlanta counties imposed even more stringent guidelines. Two of those counties banned watering altogether. Florida also implemented statewide watering restrictions.
Perhaps nothing illustrates the impact on the region's water supply as much as the drop in elevation in Lake Okeechobee in south Florida. Local residents like Ed Jones, president of Angus Investments Inc. in Port St. Lucie, Fla., are concerned about the depth of the 730-square-mile lake.
Jones, who has been involved in farming and real estate in south Florida for more than three decades, said the lake's elevation, normally at 13 to 14 feet, sank to a record low of nearly eight feet at one point this summer, threatening the water supply of the Miami-Dade area. "The previous drought we had that was this severe got the lake down to about 8.2 feet in 2000," he said. "This drought has pretty much been a recurrence of the severity we had then."
Numbers don't tell the losses . . . yet
Although the drought has adversely affected agriculture, forests, and livestock, quantifying the losses has only recently begun. Observers in agribusiness see signs, though, that make them wary of the final tally.
The USDA's initial crop production report for 2007, released Aug. 10, predicted a mixed bag of gains and losses on crop yields, but its predictions were certainly nothing that looked catastrophic. In Alabama, for instance, corn production was projected to fall 9.7 percent (from 72 bushels an acre to 65) while winter wheat production in Georgia was projected to slump 22 percent (from 49 bushels an acre to 38).
Yields actually increased for some crops, such as sugarcane in Florida (up 8.7 percent, from nearly 36 tons to 39 tons per 1,000 acres), corn in Georgia (up 2.7 percent from 112 bushels per acre to 115), and soybeans in both Georgia and Alabama (up 20 percent and 30 percent, respectively). The report projects cotton as both a winner and loser: up nearly 13 percent (from 579 pounds per acre to 652) in Alabama but down in Florida (0.5 percent from 789 pounds per acre to 785) and Georgia (3.2 percent from 818 pounds per acre to 792).
Even in cases where yields fell or failed to meet expectations, some of this performance can be blamed on an early April freeze, explains Brad Rippey, an agricultural meteorologist for the USDA. "A lot of Southeastern producers had their grass growing beautifully up into March and early April, and then the freeze burned off all the vegetation," Rippey said. The subsequent drought delivered the second half of a one-two punch to crops.
"Some of the corn that was planted early and was hit by the freeze was either replanted or just never really recovered because the drought intensified after the freeze," Rippey said. "And the corn that was replanted got hit by the drought because it was trying to go through its critical stage of tassling and silking just as the drought was peaking in the spring. It was a really nasty combination."
But whether alone or in tandem with other events, the drought's effects are what has primarily stung the Southeast.
All crops were affected, Jones said, but those with a longer maturity period appeared less devastated. Annual crops like sugarcane, citrus, or sod with a more extended growing cycle could suffer drought conditions as part of the cycle and still recover. Their yields might be affected but not to the same degree as those for short-term crops that mature in 60 or 90 days. "The shorter the crop's growing cycle, the more effect the drought had on that crop," he noted.
The timber industry also took hard hits on multiple fronts, according to Chris Issacson, executive vice president of the Alabama Forestry Association; he noted that between 80 percent and 90 percent of last winter's regeneration planting fell victim to the drought. "That far exceeds the acceptable threshold," he said. "If mortality gets up around 30 to 40 percent, you look at replanting. From a financial standpoint, the additional cost in replanting may range anywhere from $60 to $70 up to a couple of hundred dollars an acre."
Established trees also faced challenges.
"We're seeing a decrease in tree growth," Issacson said. "We typically go through dry cycles and wet cycles. So you would hope that at the end of a 25-year rotation everything evens out and that, on average, growth is where it's supposed to be. But the trees that are growing are stressed. We're seeing the beginning of additional or increased mortality due to insects and disease.
"Sometimes there's a lag between the event that causes the stress and the actual mortality that may follow," he added. "We'll be feeling this into next year with the insects and disease. While the past few years have been dry, they haven't been nearly this extreme. It's kind of like piling on. We haven't seen anywhere near the level of mortality that we're seeing this year."
Pulp, paper, and livestock suffer
Even after they're harvested, trees face challenges.
"Our pulp and paper industry is very water intensive," Issacson said. "To discharge the small wood fiber that's coming out of the process, mills have to mix it with a certain amount of water before they can legally discharge it. When there's not enough water, they'll hold that process water in their holding ponds, and they've only got so much capacity."
Three Alabama paper mills have been filling their ponds with process water, awaiting the point when they can release it. "They could potentially wind up shutting down due to lack of flow," Isaacson said. "We've got 13 pulp paper facilities in the state. You can imagine the economic impact that would occur if one or more had to shut down."
The livestock industry is better able than the agriculture and forestry industries to quantify the drought's effects, and the figures being calculated are confirming earlier fears, especially in the state hit hardest by the drought, Alabama.
"We are in the phase of the cattle cycle where a buildup in numbers normally begins," said Billy Powell, executive vice president of the Alabama Cattlemen's Association. "In 2006 we saw a small increase in numbers in spite of the drought." This year should have been a time where Alabama's cattle numbers really grew, he noted, but instead no increase will occur.
The drought took a significant toll on the state's hay production, which fell to 1.7 tons per acre from the normal two tons, according to the USDA's Rippey. The shortfall forced cattle producers to reduce the size of their herds, Powell said. "Some small herds, 30 or fewer cows, simply sold out while large herds reduced their brood cow numbers by half," he said.
"In June, 95,000 head of cattle were sold through our auction markets compared to 76,000 last year and 45,000 head in 2005, which was a normal year," Powell added. "I expect Alabama's cattle numbers to drop to 50-year lows at a time when cattle have been one of the most profitable segments of the farm economy."
Winners outdoors and indoors
In areas where an abundance of sunshine didn't wither crops or affect animals, the hot weather was welcome. The construction industry basked in a busy schedule.
"In terms of highway construction, the drought is a good thing," said Billy Hammack, president of C.W. Matthews Co., a road and bridge construction enterprise with 2,000 employees. "We typically figure about 200 construction days [annually] in Georgia that we can put in on the primary lines of our work." As of early August his firm was about 50 days ahead of that pace. "I've been with the company 36 years," he said. "We've never put this much work on the books or had this many construction days [in one year]."
Recreational venues such as amusement parks and outdoor activities such as fishing are benefiting from the dry weather. In fact, the drought has been a major contributor to improving the quality of fishing in south Florida. The lower elevation of Lake Okeechobee has increased the clarity of the lake for fishermen.
"It had been very turbid after the hurricanes of 2004 and 2005," Jones said. After the storms the lake was further stirred up by flooding from the Kissimmee River basin, he noted. "The water stayed very turbid and blocked out all the sunlight so we didn't get the plant growth needed for fish and other wildlife. Now the drought has served to filter the water and increase the clarity back to prehurricane levels."
Not everyone has been drawn to outdoor recreational venues, which has been good business for Southern Co., the parent company for many of the region's leading power providers, including Georgia Power and Alabama Power. Those who stayed inside cranked up the air conditioning. Southern Co. set a new system peak demand record for electricity on Monday, Aug. 6, and then proceeded to break that record each of the next three days. On the last day of the run, Southern Co.'s peak demand averaged around 40,644 megawatts between 3 p.m. and 4 p.m. Before this record-setting period, the previous peak average usage record was 38,056 megawatts, which occurred on Aug. 10, 2006.
Even the water restrictions that have accompanied the drought have been good for at least one business. With watering prohibitions preventing many in the Southeast from washing their cars at home, car washes have flourished. The South Carolina–based Cactus Car Wash chain began 2007 with four locations in three states. By year's end, the chain will have doubled to eight locations, with six of them in water-strapped metro Atlanta.
"Our location on Ponce de Leon Avenue is the top-grossing car wash in America," said Lennox Bundy, head of the chain's Atlanta operation.
Bundy says one of the reasons his business has fared well has been its environmental friendliness. "Our system recycles 80 percent of the water," Bundy said. "Only our waxing and final rinse cycles use fresh water. The average car wash, when someone does it in their driveway, uses about 80 gallons of water. We only use 15 to 20 gallons when we wash a vehicle."
As those affected by the drought of 2007 knows, every drop counts.
This article was written by staff writer Ed English.