South Dakota: A national leader in economic growth
It was a surprise when I read this headline a couple of months ago in the Wall Street Journal. We have been used to read about the oil boom in North Dakota and the incredible pace of its economic growth in the past several years. The refreshing surprise however was that the “other Dakota” referred to in that article was South Dakota! And what was even more important was that 75% of that growth came from agriculture. Leading the nation in economic growth while feeding the world is something that needs to make us all proud. From producers, allied industry, government, to SDSU supporting all these efforts with teaching, research, and extension. The 2015 third quarter seasonally adjusted growth rate at 9.2%, was the greatest in the US (1.9%). Our neighbors to the north with – 3.4% had the worst contraction. Health care, retail and construction industries also grew at healthy rates in the state. Only three other states experienced growth: Kansas (6.5%), Iowa (6.4%) and Nebraska (5.4%). Farm earnings also grew 17.5% in the third quarter of 2015; whereas unemployment at 2.5% was the lowest nationwide. This all happened even when facing challenging prices for most commodities.
2016 Economic Outlook
There is no doubt 2016 will bring other challenges. Crop prices received by South Dakota farmers for example were lower this March than a year ago. Corn was $3.20/bushel ($0.24/bushel less compared to a year ago); Soybean were $8.25/bushel, down $0.97 less compared to a year ago; wheat was $4.32/bushel, ($1.13 less compared to a year ago) and, hay was $93/ton ($16/ton less compared to a year ago). Livestock production also contributed to this growth. During 2015 feedlots with more than 1,000 head reported 265,000 cattle on feed up 13% from 2014. Milk production in March 2016 was 214 million pounds, up 11% from March 2014. The number of milk cows increased by 11,000 to 113,000 head, compared to March of 2015.
Agribusiness Culture & Well-Being Index
South Dakota has surprised the nation with its economic growth. Other regions in the country offer incredible conditions that could certainly make them big contenders when it comes to economic growth from agriculture. So the question is why this happens in South Dakota and not elsewhere? One thing that set us apart is the local attitude towards agricultural businesses. South Dakota ranked number one in 2014 as an agribusiness-friendly state according to an index created by Colorado State University. One other aspect which is even more important is the characteristics of the people that reside and make their living in the state. According to a recent Gallup poll South Dakota was number two in the nation in well-being trailing only to North Dakota. The Well-Being Index tracks factors such as emotional health, work environment, physical health, healthy behaviors, and basic necessities. The difference however was that North Dakota’s high scores were attributed to the strong boom in job growth associated with the oil industry, and that has changed. It would be very interesting to conduct this poll again, and see how our state ranks today in the nation.
South Dakota leads the country on per capita production of the US major crops and cattle. Agricultural areas destined to produce efficiently will be critical as we face increased migration from rural to urban areas. Priority will need to be placed on profitable, highly productive systems that lead to societal stability and are environmentally neutral at worst. However the resilience and work ethics of South Dakota stakeholders make us view the future always with optimism.