South Dakota’s No. 1 Salesman

March 25, 2014 01:17 PM
South Dakota’s No. 1 Salesman

For Gov. Dennis Daugaard, recruiting dairies to his home state is a high priority.

On Feb. 12, California Gov. Jerry Brown arrived 75 minutes late for a scheduled stop at World Ag Expo in Tulare, Calif. Reportedly delayed by fog on his trip from Sacramento, it was his first known visit in years to what’s billed as the world’s largest farm show.

Brown stepped just inside the entrance gates and was quickly surrounded by a throng of news media. His responses to the few questions asked were brief and inaudible to most of the pack. Ten minutes later, the governor of the nation’s No. 1 agricultural state left the show grounds, trailed by dark-suited staffers and security detail in a black SUV.  

At the same show the following day, South Dakota Gov. Dennis Daugaard spent several hours at his state’s exhibit inside the Farm Credit Dairy Center. The tall, congenial governor answered questions, posed for photos, lunched on a sandwich purchased from a show vendor, and beamed when pointing out South Dakota’s dairy benefits. It was Daugaard’s third visit since 2012 to World Ag Expo, the only farm show he attends outside of South Dakota.

It might simply have been a matter of unforeseen circumstances and scheduling gone awry. Or it might have been a matter of priorities. Whatever the reason, the World Ag Expo appearances of the two governors underscored stark contrasts between their states, where agriculture is the major industry in each. At a time when California is losing dairies – 387 since 2007, according to Western United Dairymen -- it may be no coincidence that South Dakota is seeing impressive dairy growth.

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In the past 10 years, South Dakota’s milk production has grown by 51%, to 2.023 billion pounds. Since 2011 alone, the state’s dairy herd has increased 4% to reach 95,000 cows. An additional 20,750 head are expected this year from four newly permitted dairies. (Two are under the same California ownership.) The state’s 10th milk processing plant, the new $100 million Bel Brands USA facility, will go online this summer.

That dairy growth hasn’t happened by chance. A deliberate, aggressive effort to recruit more dairy business to the state is credited with much of South Dakota’s burgeoning milk and cheese success. The trail-blazing push is fueled from the upper echelons of South Dakota’s government -- specifically, by Gov. Daugaard.

Since first elected South Dakota’s governor in 2010, Daugaard has made it his mission to promote the state as a welcoming home for business. According to the official state website, Daugaard has emphasized job creation, sound fiscal management and efficient government operation.

Others agree. In 2012, Barron’s magazine named the Mount Rushmore State as its top pick in the nation for "Strength of State Finances." CNBC named South Dakota No. 1 in America’s Top States for Business in 2013. California was ranked No. 47.

As part of his business-friendly push, Daugaard has made building the state’s dairy industry a priority. His support stems in part from his childhood on his parents’ small Holstein dairy in southeast South Dakota. (Both of Daugaard’s parents were born deaf, making sign language the principal means of communication for his family.)

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Dairying has changed considerably since his youth, he acknowledges. "But that doesn’t change the fact that I understand mastitis, milk quality testing and feed rations, and that I know how to care for cows," says Daugaard. "I can relate to producers."

Daugaard also favors the dairy business for another reason. "South Dakota’s greatest strength is agriculture," he says. "If we’re helping it succeed, we’re helping South Dakota succeed."

His optimism is supported by numerous advantages. For example, South Dakota has no personal, corporate income or capital gains taxes. The state remains largely rural, with fewer than 11 people per square mile and a population of just 833,000. That’s fewer than in California’s Fresno County. South Dakota not only has ample water supplies but "abundant, locally grown feedstuffs that make our feed costs among the lowest in the nation," Daugaard says. He pegs South Dakota’s dairy cost of production at $14-$16 per cwt.

The state also is home to rapidly expanding regional processors. Most are congregated along the north-south I-29 corridor that runs through eastern South Dakota. The majority of milk is processed into cheese, milk powder and whey blends that are exported globally. The Bel Brands USA plant near Brookings will process 500,000 lb. of milk a day when it’s completed this summer, with plans to double in the near future.

"South Dakota could double the size of its dairy herd today and still have demand from our cheese processors," he says.

SD Dairy Industry MapBut what Daugaard is especially proud of is a unique County Site Analysis Program his staff launched in 2013. The tool assists counties in identifying sites for potential development where dairies would be welcomed. The effort is leading to a friendlier permitting process statewide for dairy producers. The program analyzes local zoning ordinances, permitting requirements, infrastructure resources, water availability, access to the county and state road network, and proximity to other facilities.

Since its launch, 26 of South Dakota’s 66 counties have signed up for the program. Four "pilot" counties have completed the process, resulting in identifying more than 400 potential CAFO sites. Outreach to landowners has begun, and plans are underway to have 11 more counties completed by July 2014.

The benefit, says Daugaard, is that when interested dairy producers visit South Dakota, they don’t have to wander around, looking for potential sites or trying to figure out where to start. "The conversation has already been started," says Daugaard. "A dairyman can already know which county is ready and willing to establish a dairy.

"Actions speak louder than words," he adds. "And with over 15,000 head in new permitted dairy capacity in the past six months, the message is loud and clear--South Dakota is open and ready for business."

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Spell Check

3/25/2014 04:19 PM

  The last thing that we as producers in SD need is more damn dairies! We will plan to fight this ridiculously stupid plan in the next legislative session. Maybe this "Dufus Daugaard" should move to California. Our young producers are having a hard enough time trying to get started without competing with west coast and other foreign dairies!


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