Ag helped SD rebound from recession
PIERRE — The agriculture sector was a major boost to economic activity in South Dakota during recent years, according to a state government official. But lower crop prices and increasing values for farmland are worrisome for 2014 and beyond, he said.
Jim Terwilliger, economist for the state Bureau of Finance and Management, briefed members of the South Dakota Banking Commission in a conference call last week.
He said net farm income was more than 11 percent of total personal income in South Dakota for 2011 and was 8.8 percent for 2012. For the plains region, net farm income was 3.5 percent of total personal income in 2012.
Several of the banking commissioners expressed concerns that corn prices at $4 per bushel aren’t strong enough to support the increases in land values.
Dick Westra, of Aberdeen, said crop yields weren’t as good in 2013 and the impact on farmland rent and sales is unknown. He advised caution but noted the general mood was optimistic.
“Most everyone is looking to ’14 as a good ag year,” he said.
Paul Christen, of Huron, said the loss of cattle in parts of western South Dakota from the October blizzard is a concern. He said there’s some softness in retail activity in some communities and Black Friday sales weren’t as strong as they might have been.
Steve Hayes, of Presho, said crop yields were good and cattle are doing well in his area but hunting was “tremendously down this year.”
Banking Division director Bret Afdahl observed that deposits aren’t matching loans among some smaller state-chartered banks. He said it’s the first time since 2008 and generally deposit growth seems to have slowed.
Terwilliger said South Dakota emerged more strongly from the recession five years ago than the national economy has.
South Dakota non-farm employment through October was 2 percent greater than the pre-recession peak, while nationally it was still 1.1 percent less than the peak, he said.
The South Dakota forecasts for 2014 and 2015 show non-farm employment and non-farm income growing at increasingly stronger rates, accompanied by improvements in housing starts, as part of an overall moderate improvement in the economy, he said.
Agriculture played an important part in helping South Dakota get through the recession without worse economic damage. Farm income surpassed $2 billion for the first time in 2008 and continued strong in 2009 and 2010, then rocketed to $4 billion in 2011 and nearly $3.5 billion in 2012.
“Since 2008 things have pretty much just exploded in farm income,” Terwilliger said. “Quite frankly, it’s helped our state weather the recession we had better than almost any state in the nation.”
The Atlas blizzard in October took approximately 25,000 to 30,000 head of cattle, which represents about 0.8 percent of South Dakota’s total cattle inventory, according to Terwilliger. He said the direct loss to producers is estimated at $35 million to $40 million.
“While tragic for some individual producers and isolated locations, the overall impact to the statewide agriculture economy is limited,” he told the commissioners.