Flood Will Do Little Damage to U.S. Economy, Experts Say : Impact: The crop and business losses are modest compared to other natural disasters. But for some farmers, this may be the end of the line.

The flooding in the Midwest will likely have only a slight impact on the nation’s economy, government and private analysts say.

The overflowing Mississippi River watershed has disrupted farming, transportation and utilities, taxing the resourcefulness of businesses of all types.

But the damage this time, currently estimated at $3.5 billion, pales beside the $13 billion in crop losses alone suffered during the 1988 drought. Hurricane Andrew was responsible for about $17 billion in insurance claims in South Florida.

The Agriculture Department projects a flood-related reduction in corn and soybean harvests of about $1.8 billion. Hay, alfalfa and other crops will also be affected to a lesser degree. Against a national backdrop of $170 billion in crops, “these losses are very modest,” said Keith Collins, acting assistant secretary for economics.

At the most, food prices are expected to rise by only one-half of 1% over the next few months as a result of the flood, officials said. The most immediate effect could be a drop in meat and poultry prices as farmers slaughter livestock rather than incur the higher cost of feed.

“We’re dealing with something that is only marginal in the impact on the aggregate economy, and the price effect should not be large and will be relatively brief,” said Robert G. Dederick, an economist with Northern Trust Co. in Chicago. But, he added, “what we don’t know is a lot more than what we know, and it isn’t over yet.”

As with nearly every natural disaster, the flooding is expected to make winners as well as losers.

Corn growers in Indiana and central Illinois, along with soybean farmers in the Southeast, can expect to benefit from higher prices.

And someone has to sell the wading boots, pump the water out of basements and remodel the houses.

Not that they’re gloating: “It’s like taking pennies off a dead man’s eyes,” said Dick Rhoads, a partner in Iowa Industrial Erectors Corp., a contracting firm in Des Moines.

Todd Treese, manager of a West Des Moines hardware store said he is taking small joy in the 75% jump in his business, with customers lined up to buy generators and pumps.

The store has reordered some supplies four times since the advent of the floods and doubled its sales staff. The people jamming the shop nearly around the clock are “friends and customers all year round,” Treese said.

Losses to insurance companies will pale compared to those incurred from Hurricane Andrew, analysts said.

Losses covered by private companies amount to only $280 million for three of the first four storms to hit the Midwest, said Gary R. Kerney, director of catastrophic services for Property Claim Services, a unit of the American Insurance Services Group, an industry organization in Rahway, N.J.

The Federal Crop Insurance Corp. insures about half of the farmland affected by floods. So far, it estimates damage due to lost production at $721 million. In all of 1992, the agency paid out $920 million in the entire nation.

But in the small towns and prime farmland that once stood along the Mississippi, there will likely be permanent changes.

Where levees gave way, farmers are talking of giving up on their way of life.

Kent Dedert is one of them. A third-generation farmer, he watched a quarter-mile stretch of earthen berm give way to the Mississippi on Tuesday night, drowning 2,500 acres of six-foot-high corn and eight-inch-high soybeans. He had spent between $85 and $100 on each of those acres.

“I’m sitting here thinking: ‘What do I want to do with the rest of my life?’ ” said Dedert, 56. Right now, the answer he keeps supplying is: “Move to Florida.”

For some farmers, there won’t be much choice. “Some fields will be destroyed to the point where they won’t be able to be farmed again,” said Jeff Gain, chief executive officer of the National Corn Growers Assn., based in St. Louis. “If the river pours in, there will be soil erosion, huge potholes, rebuilding problems for ditches and drainfields.”

In Iowa, tourism--a $2.6-billion industry that is the state’s third largest--is taking a beating.

A toll-free telephone number carries a taped message listing events that have been canceled or moved. The Keokuk River Museum is closed. Riverboat casinos in Davenport and Ft. Madison are closed.

Despite a ban on barge traffic along the Mississippi, which operators say costs them $2 million a day, the river-transport industry is more concerned about possible new fuel taxes than the effect of the floods.

ContiCarriers & Terminals Inc., a Chicago-based shipping company, has half of its approximately 250 barges idled above Cairo, Ill., where the Mississippi is closed to shipping.

The crews have been sent home; “they just wait it out like we do,” said Jeff Covinsky, the firm’s marine operations manager.

But barge crews get paid for a certain period of off time. The river is expected to open before their paychecks stop.

For the company, loss of barge fees on the Mississippi has partially been offset by a pickup of activity along the Ohio River, where grain is being diverted for transport to New Orleans and the export market.

The products, agricultural analysts say, will not spoil while they wait to travel to market.

Upstream loads include coal and petroleum products, but Paul Werner, vice president of the American Waterway Operators Assn.’s mid-continent region said he believes that factories and power plants have stockpiles that will last until deliveries resume.

Many railroads reported tracks closed between Chicago and Kansas City. Others were forced to reroute trains around flooded bridges.

But normally competitive railroad companies have been taking on cargo for each other.

Even so, delays have reached up to 48 hours in some cases, with cargos sitting on sidings.

In one case, a train from Chicago was routed south to Memphis, Tenn., on the Illinois Central Railroad, then to North Avard, Okla., on the Burlington Northern Railroad, then to Los Angeles on the Santa Fe Railroad.

The trip, which normally takes 72 hours, ended up taking 93, said Philippa Dworkin, a spokeswoman for the Atchison, Topeka & Santa Fe Railway Co.

The Santa Fe Railroad was forced to reroute 40 of its trains. The blockages have forced cargo to back up all the way to Los Angeles, where Santa Fe was turning away some shipments destined for its Missouri or Illinois lines.

Officials at the ports of Los Angeles and Long Beach characterized the problems as minor.

The nation’s ability to withstand the flood losses, though, does not minimize the need for quick government aid, economists said.

“It’s not as though we’ve closed the gates and the state has shut down, but we have a very difficult situation on our hands here,” said Charles H. Whiteman, director of the Institute for Economic Research at the University of Iowa. “There are a lot of people who suddenly became a lot less wealthy.”

Even those who stand to benefit from the rebuilding effort say they’ll need help.

Rhoads said his contracting company sustained about $250,000 in property losses from the surging Des Moines River.

“There will be a lot of work, maybe in a month,” he said. “But right now, there’s none.”