NOV. 3, 2017 - VOL. 54 No. 2

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Ag industry downturn impacts all citizens

A downturn in South Dakota's agriculture industry has caused a ripple effect across the state. South Dakota Secretary of Agriculture Mike Jaspers recently shared insights on the trend with more than 70 members of the Chamber's Board of Directors, Issues Management Council and Agri-Business Division Advisory Council. Sec. Jaspers covered issues ranging from the current state of agriculture in South Dakota, to why the ag industry is in a downturn and how international trade agreements are vital to agriculture.

In the past year alone, farm income in South Dakota fell 57 percent - or approximately $1 billion. This decrease in income has already been felt at the state level - through the first three months of fiscal year 2018, total actual general fund receipts were $2.7 million lower than estimated. The South Dakota State Legislature will have some difficult decisions to make during the upcoming session regarding the budget.

The ag downturn will also likely touch every citizen and business to some extent, if it hasn't already. The ag industry is the state's single largest industry, making up over 30 percent of the state's total economic output. South Dakotans are expected to be affected in three different ways - a direct decrease in the products produced and sold, an indirect decrease in value added through production processes and a decrease in consumer spending. In Sioux Falls, the impact is evident in our city's lagging sales tax revenue.

To explain the decrease in farm income, Sec. Jaspers pointed to multiple factors. A significant culprit is the abnormal weather that South Dakota has been experiencing - wet spring and fall months and drought during the summer and winter months. As of early August, over 55 percent of South Dakota was rated as experiencing "severe drought" conditions with over 80 percent of the state experiencing "moderate drought". When abnormal weather is combined with persistently low commodity prices, farm incomes suffer.

Sec. Jaspers outlined the conditions of various crops to put some figures behind decline. The callout box above demonstrates the current poor state of crops.

Crop Conditions:

Winter Wheat: 65% rated poor or very poor (many acres were not even harvested)
Spring Wheat: 75% poor or very poor
Pasture: 54% poor or very poor
Corn: 25% poor or very poor
Soybeans: 17% poor or very poor

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