Cattlenetwork.com - Jolley: Five Minutes With South Dakota Governor Mike Rounds

Cattlenetwork.com - Jolley: Five Minutes With South Dakota Governor Mike Rounds

Mike Rounds is a hot seat governor, leading a state where agriculture is king and a devastating six year drought is trying hard to dethrone it. Record high temperatures and almost no rain have destroyed corn crops and driven many cattle ranchers out of the business. Still, he's worked hard to stem the tide of bad news and a failing farm economy. Under his watch, the state has moved away from almost total reliance on commodity crops and toward a more balanced economic base. Investment in further processing facilities have soared almost as high as the thermometer on Don and Lura Kirkpatrick's porch.

But the woes of South Dakota's farms and ranches still bedevil him. On Tuesday, accompanied by North Dakota Governor John Hoeven, South Dakota Representative Stephanie Herseth and South Dakota Senator Tim Johnson, he took Ag Secretary Mike Johanns on a tour of some of the more parched regions of the state stopping at the Kirkpatrick farm, unfortunately located at the epicenter of the drought.

Johanns came through for Rounds, who packs some additional political clout as Chairman of the Western Governor's Association. After touring drought-ravaged South Dakota, he announced a new program for livestock producers. The Livestock Assistance Grant Program will provide a total of $50 million in Section 32 USDA emergency funds as block grants to states that have counties rated as D3 or D4 on the Drought Monitor Map between March 1st and August 31st of this year. Each state will disburse their share of the funds to eligible livestock producers living in the effected counties.

Fifty million is a modest effort, a stop-gap at best for an area that stretches from Texas to North Dakota, according to some regional politicians. It might help tide a few ranchers over for a little while but more will be needed soon, especially if the drought continues. Rounds is already working on a solution, suggesting a novel precipitation-based relief plan at a meeting of the House Agriculture Committee meeting

I took the opportunity to ask a few questions of Governor Rounds shortly after his visit with Secretary Johanns.

Governor Rounds, you've put South Dakota on the news map when it comes to agricultural issues. First, let's talk about the South Dakota Certified Beef® program. You've been quoted as calling this a "state of origin labeling" program and comparing it to the often controversial COOL program. Can you tell me how many people are actually participating in the program - ranchers, packers and processors - and how successful it has been so far?

We currently have 125 licensed producers, and nine locally owned processors and marketers. While we do not track prices received for cattle enrolled in the program, we have heard anecdotally that there have been significant premiums for the enrolled cattle. But what is most encouraging is that our processors and marketers can't meet the demand for our branded product.

South Dakota has enjoyed some significant expansion of its meat processing facilities while other nearby states suffered serious losses. Most recently, Northern Beef Packers announced plans for a new facility, John Morrell is considering a multi-million dollar expansion project and Dakota Turkey Growers started up from scratch. What's behind all that investment?

Optimism. This optimism is fueled by SD's pro-business climate as well as the principles outlined within the 2010 Initiative. The 2010 Initiative is a comprehensive set of goals, objectives and action plans; focused on improving our state by the year 2010. Goal two of the initiative is to increase our Gross State Product (GSP) from $24 billion to $34 billion by the year 2010.

We are moving forward; and value-added agriculture is leading the way. For way too long, South Dakota was considered a commodity state. We shipped our corn, cattle, beans, sunflowers and turkeys to other places for processing. Those entities were the ones who made the greater profits. We have been working diligently to educate our ag community on the value of further processing and then investing with our local communities to make their goals a reality.

South Dakota hasn't escaped from some of the problems that have crippled agriculture in the Midwest. The drought has hit the southern, central and western parts of the state particularly hard. The New York Times quoted Herried Livestock Market owner Herman Schumacher as saying "It's a grim situation. There's absolutely no grass in the pastures, and the water holes are all dried up. So a lot of people have no choice but to sell off their herds and get out of the business." On Tuesday, you joined USDA Secretary Johanns on a tour of the Don and Lura Kirkpatrick farm and the stricken area around Hayes, SD. Can you give me a first hand account of how bad it looked and what the state and federal governments can do to help?

It's very dry at Don and Lura's ranch. Like many other South Dakotans, they are experiencing a sixth straight year of drought conditions. It was really good to have Mike Johanns come here and view firsthand the challenges that South Dakota ranchers are experiencing. The secretary announced some short-term relief to the effects of the on-going drought. As Chairman of the Western Governor's Association, we coordinated a letter which was signed by 17 western U.S. governors; asking the President and the Congress to consider long-term and permanent drought relief plan. Recently, in front of a House Ag Committee Field Hearing in Wall, S.D; I made a proposal for a drought relief plan that is based on deviation from normal precipitation. If it doesn't rain, crops don't grow.

You've requested that 51 of the state's 66 counties be designated a federal agricultural disaster area and even issued a proclamation declaring a week to pray for rain. With over 85% of the state enduring an agricultural disaster, can you talk about the losses in terms of real dollars as well as in human terms?

86% of producers in South Dakota have crop insurance which vary from 50%-85% coverage (most are covered at 65%); until harvest is complete, insurance payments are made and federal payments are allocated, it is difficult to determine the impact for our crop producers. We have already seen the initial impacts to our livestock industry, though, in the early livestock sell offs. These conditions have been further exacerbated by high fuels, feed and crop input costs.

With what can only be euphemistically referred to as "early dispersal" sales skyrocketing at least five-fold over last year, you have asked that federal officials grant a two-year extension to the period for purchasing replacement livestock. Although it would help cattle producers avoid capital gains tax and use the money made from early sales to buy back livestock once the drought breaks, how do you plan to help the smaller or less financially secure ranchers hang on until then?

The two-year extension will benefit small and larger producers alike. Plus, with the monies that USDA-FSA has available now through the Emergency Conservation Program and the new Livestock Assistance Grant Program, farmers and ranchers will have the ability to get reimbursed for some of the expenses they have incurred. Items like transportation, feed, running water pipe or drilling wells are eligible. While these programs won't make people whole, they sure can help keep a family in business for a while longer.

You seem to be willing to trade "COOL" for "SOOL." What are your thoughts on a National Animal Identification System?

South Dakota is the first state to implement a licensed state of origin label. We support the concept of COOL, but producers who voluntarily become a licensed producer of South Dakota Certified Beef® are really supporting SOOL or State of Origin Labeling. We also support a national animal id system for health and safety reasons. Customers around the world like the fact that our processors and marketers provide a product that is source, age, and quality verified.

Thousands of cattlemen read Cattlenetwork.com. What would you like to say to them?

Our state is synonymous with agriculture, and specifically, the cattle industry. At last check, more than 1.5 million cattle are born and raised here. Feeders around the country have realized for years that if they want quality calves, they come to South Dakota. Unfortunately, a lot of those cattle are fed in places other than South Dakota. We are starting to see a small shift in the number of cattle that are finished in right here at home.

South Dakota currently has 17 ethanol plants either operating or planned for construction. At the end of next year, it is estimated that there will be more than 800 million gallons of ethanol produced in our state. With that comes a tremendous feedstuff that the industry calls a by-product: distiller's grain.

With the cost of transportation at near record highs, it makes sense to capitalize on the inputs close to the source. And that means feeding cattle where they are raised…in South Dakota.

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