Operators, farms fight to stay afloat in flooded Midwest: heavy rains submerge corn and soybeans crops, raising fears about worsened meat and dairy inflation

Nation's Restaurant News,  June 23, 2008  by Carolyn Walkup

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The Midwest's restaurateurs, foodservice workers and diners, along with farmers there who were struggling to grow precious corn and soybean crops, scrambled this month to salvage property and farm fields inundated by a monumental flooding disaster that submerged millions of acres.

Business as usual was impossible as entire riverfront downtowns were evacuated in such Iowa cities as Cedar Rapids and Waterloo and officials ordered unprecedented closings of parts of Interstate 80 in Iowa, Interstate 94 in southern Wisconsin and countless local streets, highways and bridges.

Tens of thousands of residents and business operators were left homeless or shut down as flood waters engulfed their houses and establishments, and restaurateurs forecast more meat and dairy inflation because of grain crop losses.

Farmers may not be able to save flooded corn and soybean crops, which are expected to have long-term impacts on commodity prices, already at all-time highs. Partly as a result of flooding, the U.S. Department of Agriculture has predicted the corn harvest will drop at least 10 percent this year, likely to cause prices to surge beyond the 73-percent jump of the past year, which was blamed in part on large-scale diversions of corn to ethanol production.

"July is the critical month for corn," said Vic Lespinasse, a Chicago Board of Trade grain analyst. "At this point, you can't keep planting corn because it will pollinate at the hottest time and may not be mature before the first freeze."

Bradley Burt, chief executive of 90-unit Maid-Rite, a regional icon known for its "loose-meat" sandwiches, said the Des Moines, Iowa-based chain expects to be hit by markedly higher prices for corn-fed beef and other corn-dependent products between November and next February.

At the moment, Burt's company is helping franchisees whose units were flooded clean up and reopen. Restaurant equipment damaged by water probably will have to be replaced, he said.

"We have never seen it like this," said Burt, who also experienced the severe 1993 flood that hit Des Moines and Davenport, Iowa.

While assessing the extent of flood insurance coverage against losses and whether aid can be obtained from the Federal Emergency Management Agency, Maid-Rite will help affected franchisees find used replacement equipment and obtain supplier discounts, and the franchisor will abate its fees on flooded operators temporarily, Burt said.

Culver's Franchising of Prairie du Sac, Wis., which did not have much direct restaurant damage, was looking out for employees who live in affected areas, including those near where a tornado struck in Colorado.

"Our major focus is to make sure our team members are safe and taken care of," said spokesman Chris Contino, adding that Culver's units served complimentary food to Red Cross workers and volunteers.

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Some parts of southern Wisconsin were hit by flooding, with the most publicized incident being the draining of Lake Delton when an embankment gave way in the tourist-heavy Wisconsin Dells area. Resorts and restaurants on that lake remained open, minus their usual lake view and water sports.

No matter what the extent of the damage, the state's restaurant and resort owners will quickly get themselves going again, said Ed Lump, chief executive of the Wisconsin Restaurant Association. Businesses and homeowners in many parts of the state located on small lakes face dangers of dams breaking, he said.

"The Dells is not waiting around for the government here," he said. "It's not the nature of the people in this state. Most of them will roll up their sleeves and get their businesses open."

The Wisconsin Dells Convention & Visitors Bureau immediately went into damage-control mode, telling inquirers that 93 percent of the area's tourist-related businesses were not impacted. In a typical year, the Dells, which has many man-made water parks in addition to natural scenery, hosts 3.1 million visitors who spend $1.03 billion, said Melanie Platt-Gibson, a visitors bureau spokeswoman.

Tom Diehl, who heads the area's popular Tommy Bartlett water ski, sky and stage show on Lake Delton, said the show will go on minus the skiing stunts. He and other local business owners have been denied business interruption insurance because the village of Lake Delton did not participate in a national flood insurance program.

Inadequate insurance poses a problem for other business owners, including Barmuda Corp. of Cedar Falls, Iowa, operator of five local casual-dining restaurants. The company lost its corporate office and warehouse and had to close two restaurants temporarily.

"This has been a devastation for our entire community," said Lori McConville, Barmuda's vice president of marketing. "We had very little flood insurance. It's very expensive."

Darren Beck, Barmuda's owner, estimated the company's property and revenue losses at $500,000.