$25.6 billion state ag industry holds its own amidst challenges, embraces opportunities

Farm Forum

DEADWOOD — The second day of the sixth annual South Dakota Governor’s Agricultural Summit, hosted by the South Dakota Department of Agriculture, kicked off Friday in Deadwood with South Dakota Secretary of Agriculture Lucas Lentsch mincing no words about the challenges facing South Dakota’s agriculture industry today, providing the impetus for his department to be relevant for today’s producers and growers in identifying opportunities and celebrating the growing list of successes that the South Dakota ag industry has racked up.

“The Governor’s Ag Summit is a great time for farmers, ranchers, ag industry leaders, legislators, and congressional delegates to come together and discuss the future of our number one industry,” said Lentsch.

An industry that employs more than 115,000 residents across the state, talking ag bucks is big business.

“Agriculture is South Dakota’s number one industry, generating $25.6 billion in economic activity in our state,” said South Dakota Governor Dennis Daugaard. “Our annual summits provide an opportunity for leaders in agriculture to come together to learn and network. As you know, this year has brought a lot of change to the agriculture sector. This change has brought both challenges and opportunities to the industry. It has also pushed us all to think more deeply about what the future of agriculture looks like in South Dakota.”

According to USDA-generated list of state rank in U.S. agriculture for 2014, South Dakota ranked number one in bison, oats and sunflowers; number two in alfalfa hay and honey production; number three in millet, flaxseed and spring wheat; number four in dry edible navy beans, all hay and all wheat; and number five in beef cows, calf crop, lamb crop and popcorn.

South Dakota also ranked number five in land in farms.

“Only Texas, Montana, Kansas and Nebraska have more land used for agriculture,” Lentsch said.

South Dakota ranked number six in corn for grain, market sheep and lambs, and wool; number seven for cattle on feed and winter wheat; number eight in cropland and soybeans; and number nine in pig production.

“These are big numbers. Last year we planted 5.8 million acres of corn in South Dakota,” Lentsch said. “That’s over 800 billion bushels harvested last fall.”

Lentsch began his address by listing a number of policies currently impacting agriculture including: Waters of the United States (WOTUS), the Renewable Fuel Standard (RFS), the Endangered Species Act, and Pollinator Health.

The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) have released a proposed rule to revise the definition of “waters of the United States” (WOTUS) for all Clean Water Act (CWA) programs. Despite the agencies’ claims to the contrary, the definitional changes contained in the proposed WOTUS rule would significantly expand federal control of land and water resources across the nation, triggering substantial additional permitting and regulatory requirements.

Lentsch said WOTUS is bad news for South Dakota and particularly detrimental to its ag industry and encourages the EPA and the Corps to work with producers in crafting a rule that protects South Dakota’s natural resources and respects its ag producers, as well. A state map filled with red demonstrated the significant state-wide impact WOTUS would have on South Dakota’s water resources. Lentsch thanked South Dakota Attorney General Marty Jackley in joining attorneys general of 12 other Western states in a law suit to have the rule vacated and to prevent the new definition of WOTUS from being enforced.

Efforts are currently underway in Congress to prevent the WOTUS rule from going into effect.

“That would require the EPA and the Corps to try again,” Lentsch said. “This time working with the states and the ag industry, not against us.”

The RFS program was created under the Energy Policy Act (EPAct) of 2005, and established the first renewable fuel volume mandate in the United States. As required under EPAct, the original RFS program (RFS1) required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012.

Although higher than proposed in 2014, levels are still lower than those established by Congress in establishing the RFS in 2007.

“Unlike WOTUS, this is a proposed rule that the EPA can and hopefully will change,” Lentsch said. “A strong RFS creates a strong state economy…the 15 ethanol plants in South Dakota create jobs … Here in South Dakota we produce over 1 billion gallons of ethanol, making us number five in the nation in ethanol production. The best way to maintain this is through a strong renewable fuel standard.”

Lentsch also noted as a challenge, the use of the endangered species act as a tool for environmental activism and its tendency to thwart ag development when an animal is listed.

He noted the recent listing of the Northern Long Eared Bat and the proposed listing of the greater sage grouse would have significant detrimental impact on ag and forest industry in the state.

The introduction of President Obama’s pollinator task force and the emphasis on bee health has Lentsch’s office pushing for a state-controlled solution to the problem, working with producers and pushing for answers other than pesticides in colony collapse and other issues.

Lentsch also pointed to the poultry industry’s devastation by highly pathogenic avian influenza and said that while numbers have dropped off recently, 10 operations were affected in South Dakota: nine turkey and one ag land facility.

“About 500,000 turkeys were depopulated across the state and 1.25 million laying hens,” Lentsch said.

“The past year has brought some other changes, as well. Changes to prices producers are seeing at the elevator and at the sale barn,” Lentsch said. “Row crops like corn, soybeans and wheat have faced falling prices … On the flip side, we’ve also seen significant increases and good stabilization of the livestock markets.”

As much as there have been policies out of Washington presenting challenges, there are others presenting great opportunity, including two big U.S. trade agreements, currently in the works: the Trans-Pacific Partnership agreement, the countries which comprise, receiving 73 percent of South Dakota’s exports, and the possibility of opening up Cuba, which imports 80 percent of its food, for trade.

In 2013 South Dakota exported more than $1.6 billion in goods such as soybeans, corn, wheat and livestock.

Lentsch commended the state on its reinvestment in its infrastructure – the $14 billion South Dakota road system, which is vital in getting ag products from farm to market, as well as its reinvestment in rail to prevent backlogs and bottlenecks in order to keep South Dakota commodities moving.

Overall, all ag lands values increased by 1.4 percent in 2014, compared to a 6.1 percent increase in 2013. Overall, crop land values decreased by 4.8 percent in 2014 compared to an increase of 5.4 percent in 2013. Rangeland increased 20.3 percent in 2014, while pasture increased 13.5 percent.

Lentsch was enthusiastic about the new 4-H hall at the state fair grounds, a 46,910 square foot building with 4,000 in seating capacity, announcing that $3.983 million of the $4.7 million funding goal has been raised.

In closing, Lentsch said that one of the most important things those involved in the ag industry can do is to look at the silos each is operating in and take them down to enhance communication.

“Open up dialogue,” he said. “There are fewer and fewer of us coming from agriculture, so it’s important for us to be engaged and relevant.”