Global climate change is arguably the most urgent issue facing our society today. While the debate has been heating up in recent years, weather conditions around the world have become increasingly volatile. In the past year, severe weather conditions have devastated land across the United States, displacing thousands of families and even causing casualties. As agriculture and food production are largely dependent on weather conditions, these catastrophes have had a wide-scale impact on the agriculture industry. While not the most consequential, the economic loss to the agriculture, food production and beverage businesses cannot be ignored.
Recently, communities across the United States have endured severe conditions, ranging from fires in California to hurricanes on the east coast. The Ventura County, California Thomas fires in January 2018 particularly were devastating for farmers. Over 10,000 acres of crops were lost, with an estimated total cost of $171 million in damages and destroyed crops. That amounts to approximately 8.5 percent of the $2B gross value of crops in 2016 for Ventura County. Hurricane Irma in 2017 and Hurricane Florence in September 2018 have plagued the markets of our nation’s top cotton and livestock producing states. The impact of these disasters will be felt for some time, as intense soil saturation has caused structural damage to the roots of crops, and severe flooding caused many livestock farmers to lose their herd.
The Food and Agriculture Organization of the United Nations reported that as of 2016, economic losses from natural disasters reached an astonishing $250-300 billion on average per year from 2014-2016, while the occurrence of such events has doubled since 1990. For comparison, the national 2018 education budget is $64.9 billion.
These facts speak for themselves, and seem to be trending in the wrong direction. Agriculture business experiencing economic losses as a result from natural disasters can find some relief through special tax provisions designed to aid businesses in recovering from such events. In the wake of hurricanes in Florida, Texas and Puerto Rico, President Trump signed off on a spending bill including almost $90 billion in February 2018, $2.36 billion of which was earmarked for assisting the agriculture industry in recovering from the impacts of these disasters.
If any of these natural disasters have affected your business, please contact GHJ tax professionals at 310.873.1600 for more information and to help explore your options for tax credits and relief.