Insurance Industry
This statement is certainly true on many occasions, especially when those "blue northers" rush in... If you don't like the
This statement is certainly true on many occasions, especially when those "blue northers" rush into the Lone Star State or when the temperature changes abruptly because of the sudden approach of a weather front.
However, over the past several months, the expression has failed to live up to its reputation, because in many areas of the state, the weather has remained practically the same -- hot and dry! Some parts of the state have been in various stages of drought since the spring of 2005. Other areas have seen some of the driest spells on record and then faced flash flooding. All in all, though, what rain there has been has generally been either "too little, too late" or "way too much." As a result, farmers and ranchers have been hit hard, and the damage is mounting.
The agriculture sector is small in many respects, especially when compared to other segments. Agriculture industries generate some $7.78 billion each year and represent approximately 0.88 percent of Texas' real gross product. The sector's 95,500 workers represent about 0.94 percent of Texas wage and salary jobs. In some geographic areas, however, ag is a much more dominant player.
Although not as large as some, the agriculture sector is an important aspect of the state's economy, and agriculture products and services are among the state's top 10 exports. During the first two quarters of this year, the agriculture industry accounted for 2.43 percent of Texas exports. This percentage equals nearly $1.75 billion. For the year 2005, the agriculture sector, though down 10.59 percent from the 2004 aggregate, was responsible for $2.71 billion or 2.11 percent of the state's total exports.
Unfortunately, due to adverse weather conditions which have caused such a lengthy drought, the Texas agriculture economy has been negatively impacted and has suffered extensive economic loss. Some officials estimate that through last month, the state's agriculture industry has undergone crop and livestock losses of about $4.1 billion. This amount represents the worst single-year loss in Texas history, significantly more than the $2.1 billion loss in 1998.
Crop failures account for 61 percent ($2.5 billion) of the losses with $1 billion associated with cotton. The decimation of the Texas cotton crop is even causing some growers to consider insurance alternatives while others are taking part-time jobs to keep financially afloat.
There is also the possibility that the wheat crop this year could have less than normal yields, with most of the reduction attributed to the drought. Furthermore, upwards of 90 percent of Texas ranges and pastures are estimated to be experiencing stressed conditions.
Dry conditions and rising feed costs, as well as high fuel prices and sagging markets, have caused many cattle producers to liquidate large portions of their herds. Sales at cattle auctions are running some 2 percent ahead of this same period last year.
On top of the estimated $4.1 billion crop and livestock losses, businesses and operations that provide services to farmers and rangers are expected to endure an additional $3.9 billion hammering.
Some areas of the state are receiving occasional precipitation, but rainfall in most parts of West Texas has been little and far between. Of the state's 254 counties, 226 are currently experiencing dry condition levels sufficient to cause increased fire risk potential. The dry circumstances have also caused extensive evaporation of lakes and reservoirs, and many areas of the state have imposed, or are considering, water use restrictions.
The Lone Star State is no stranger to dry conditions, and over time has seen a variety of "rainmaking" ventures come and go. Back in the 1960s, both the state and federal governments funded cloud seeding research and weather alterations projects. Although most government funding is no longer available, several rain enhancement projects are currently being undertaken in various parts of the state. Some of these projects have achieved modest successes, but not enough to completely turn things around.
The longer the drought continues, of course, the greater the potential for its impacting the overall state economy. However, we've come a long way from our days of relying on cotton and other ag products for our economic success. The fallout will certainly be devastating for some individuals and families and is likely to slow the pace of expansion in certain areas. For the state as a whole, things are looking good, though I think we'd all be thankful for a little relief!
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