Corn Powers South Dakota’s Ag Economy

What would South Dakota look like without corn production? What value does corn production truly bring to the state? And, more importantly, why should South Dakota farmers continue producing tremendous amounts of corn in lieu of other crops?

Those are the questions that the South Dakota Corn Growers Association (SDCGA) was seeking to answer as part of a recent study by Iowa State University on the economic impacts of South Dakota’s corn industry.

“Corn exports, corn for livestock production and ethanol are the three-legged stool driving the viability of South Dakota’s corn industry,” says Dave Swenson, Associate Scientist, Department of Economics, Iowa State University, who conducted a study on the economic impact of corn in South Dakota.

Economic Powerhouse

Imagine South Dakota without corn production. Envision a state with diminishing rural communities, supported by families with low incomes, high unemployment and bleak prospects. True, perhaps another crop would be grown in place of corn, but there is no denying what the study found in regard to the economic impact of corn production in South Dakota:

• From 2015 to 2017, corn farming produced $2.6 billion in total industrial output.
• More than $450 million was added to South Dakota’s gross domestic product (GDP).
• Corn production in South Dakota supports more than 6,000 on-farm jobs.
• Secondary uses of corn add an additional 16,890 jobs to the state.
• The ethanol industry alone adds nearly 10,000 South Dakota jobs.

“So many jobs in South Dakota are linked to corn farming,” says Swenson. “For every dollar a farmer loses in income, it has a multiplier effect toward the whole economy in terms of $1.23 in lost income.”

All of this economic value driven by corn production is significant, in terms of the financial impact corn production provides to revenues in South Dakota—both personal income for those employed in the corn production supply chain and as corn progresses through those secondary uses, but tax revenue, as well.

Swenson says it’s all interconnected; there’s a ripple effect in the entire South Dakota economy when the corn industry is affected.

“Lower corn prices can cause that multiplier effect,” says Swenson. “But it causes the corn industry to adjust and produce something else, so there’s a shift both upstream and downstream on those in the supply chain that are dependent on South Dakota corn.”

In analyzing the facts, the answers are clear: corn drives South Dakota’s agriculture economy, and no other crop can claim that much influence on our state’s economy, job creation and revenues.

2018 Harvest Outlook

A strong corn crop sets farmers up for success—and everyone else in the supply chain, from cooperatives to elevators to agronomists, and ethanol production, livestock farmers and exports further on down the chain. With so many dollars and jobs riding on corn yields, the stakes couldn’t be higher for South Dakota corn farmers.

Because South Dakota corn production can cause such a domino effect throughout the state, Midwest and the world, we talked with Jon Kleinjan, Crop Production Extension Associate with South Dakota State University, about what the 2018 South Dakota corn harvest has in store for farmers.

“It depends a lot on where you are in the state,” Kleinjan says. “We haven’t seen any widespread pests or diseases, and as long as the frost stays away until the beginning of October, we may see record yields in some parts of South Dakota.”

Although many corn farmers may think the majority of the growing season is completed, Kleinjan says that September is an important time for the corn plant, as it’s when the corn finishes filling out—a contributor to high corn yields.

Kleinjan did note that some areas of the state have struggled with either too much or too little moisture during the growing season.

“North of Huron and near Aberdeen have been dry, so they’ll see average to below average harvests,” Kleinjan says. “The southeast part of the state has been wet all year, but wet weather doesn’t really hurt yields as much as people think it does. Corn that didn’t drown out in the southeast will be good.”

Of course, there are still several weeks to go before harvest, so it remains to be seen what yields will be.