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Towards A Circular Agricultural Economy

Jun 23, 2015

By Alvaro Garcia

SD has experienced unprecedented agricultural growth

In 2015 the USDA analyzed the unprecedented agricultural growth that has been operating in South Dakota during this century. It led the agency to label the state as a future “agriculture powerhouse”. While between 1997 and 2002 agricultural sales grew by only 4.7 percent, they jumped to 71 percent between 02’ and 07’, followed by an additional 55 percent between 07’ and 2012. It is likely the growth during the last five-year cycle was slowed down as a result of the 2012 drought. Crop production growth (grains, oilseeds, beans and dry peas) was majorly responsible for this economic growth when compared to livestock (beef, swine, poultry, and dairy). When crops, livestock, and other Ag figures were combined, they contributed nearly 30 percent of South Dakota’s total economic output. Of this agricultural contribution to the economy 53.3 percent corresponded to crops, 33.3 to livestock, and 13.4 to other Ag industries.

The importance of agriculture in the state's economy

Both North Dakota and South Dakota’s economies strongly depend on agriculture. Their share of the gross state product derived from agriculture and food manufacturing puts them first and second, respectively among all U.S. states according to the 2012 census. Agricultural production and food manufacturing combined, constituted 11.9 percent of the gross state product (12.1 for North Dakota). When agricultural production was considered on its own it accounted for 10.5 percent of the gross state product. This figure puts South Dakota again as number two in the U.S. (North Dakota was number one with 10.6 percent). However, when food manufacturing contribution is looked separately, South Dakota with 1.4 percent, ranks 22nd among all states.

Food Manufacturing: An opportunity for further growth

Although one of the top two states in the country measured by the gross state product from agriculture, South Dakota however lags behind (22nd) in food manufacturing. This should be viewed as an outstanding opportunity for food industry investors; some have already realized this! By adding value to agricultural outputs South Dakota would close the loop and enter into a more circular economy. This would impact job creation, economic competitiveness, resource savings, and waste reductions. For example, South Dakota agriculture is responsible for roughly 20 percent of all jobs created, the highest individual job-creation category. Doubling food manufacturing internally will put the state in the top 10 in the country. States with a greater balance between food production and manufacturing are Iowa, Nebraska, and Idaho. In 2012 these three states ranked respectively 3rd, 4th, and 5th in gross state product derived from food production, and 2nd, 5th, and 7th in gross state product derived from food manufacturing.
 

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