Billion Dollar Blowout: Billion Dollar Blowout

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Consumers can expect to pay more for basics such as coffee, bananas and paint (made at idled chemical-processing plants in the Gulf). New Orleans is the second largest coffee port in the country, after New York, and stores 27% of the nation's beans. "Right now those supplies are off the table," says Joe De Rupo of the National Coffee Association. Imports are being rerouted to Houston, Miami and Jacksonville, but no one knows whether the 211 million lbs. sitting in bags in New Orleans is salvageable or whether the roasting equipment, possibly submerged in contaminated water, can be saved. That's troublesome for small roasters and for giants like Procter & Gamble, which closed its Folgers plant in New Orleans just before the hurricane. Bananas destined for Gulfport, Miss., are being diverted to other ports, with Chiquita sending boats to Freeport, Texas, and Port Everglades, Fla. "If volume is affected, our customers will have to raise prices," says Chiquita spokesman Michael Mitchell. At least hot-sauce fans can rest assured: Avery Island, La.--based McIlhenny, maker of Tabasco sauce, claims production is running smoothly and all its employees are safe.

How will this affect the price of cornflakes?

Katrina hit just as the farm belt was gearing up for the fall harvest, and exporters may be forced to find ways around the blocked shipping channels in the lower Mississippi--a critical conduit for agricultural products. The U.S. exports about $600 billion in cargo through ports that were hit by the hurricane, and some 2,000-ton barges are literally stuck in the mud, says Larry Daily, president of Alter Barge Lines. "It's like you've clogged the pipeline for a week." Archer Daniels Midland, a major grain exporter, operates four grain terminals in Louisiana. Several hundred of its barges are stranded in the lower Mississippi, some grounded and waiting to off-load. The firm is studying rail alternatives and considering diverting some shipments to Galveston, Texas.

But shipping grain by rail or truck isn't feasible on a large scale; it's too costly, and freight lines are already booked solid. It would take as many as 60 trucks to transport the 55,000 bu. of corn that would fit on a barge, says David Feider, a spokesman for the grain exporter Cargill. "We're not diverting cargo," he says. The prospect of corn being dumped on the domestic market has already depressed spot prices. But don't expect a break in the price of cornflakes. The corn in a 1-lb. box costs cereal makers just 3¢, a tiny part of the total cost, according to Robert Wiser, an agricultural economist at Iowa State University. Higher energy costs more than offset any cuts in the price of corn.

Will insurance rates go up?

Not necessarily. Last year the global insurance industry paid out a record $49 billion in claims, including $23 billion for U.S. hurricane damage, according to the reinsurance firm Swiss Re. There is plenty of money sloshing around the global- insurance pool to handle Katrina claims, and the Federal Government will pick up the tab for flood damage. One concern for consumers is that many insurers, facing hurricane-related claims, may pull out of the state, setting off a homeowner scramble for new policies. Only a month after state regulators approved a 21% rate hike, Nationwide Insurance announced that it wouldn't renew policies for more than 35,000 homeowners in Florida.