SD Drought: 'Everybody's going to take the losses'

South Dakota’s stuck in its worst drought since 2012.

The latest figures from the U.S. Drought Monitor put 80 percent of the state in some stage of drought, with 15 percent in extreme drought. Nearly every part of the state is classified as “abnormally dry.”

There’s more rain this year than in 2012, but 2017 has the potential to be more serious — especially if temperatures stay high and the rains don’t come soon.

In 2012, the drought hit much of the Midwest.

This time, as Montana and the Dakotas suffer, Minnesota and Iowa aren’t in a drought, and are on pace to produce enough corn and soybeans to keep prices low.

That means less money for smaller harvests in South Dakota, and lower insurance payments if the crops can’t be salvaged.

It might seem like a far-off problem for a Sioux Falls resident working in an air-conditioned call center, but the ripple effects of a drought in a state that counts agriculture as its number one industry are far-reaching.

Less money in agriculture means less sales tax revenue to fund state and local governments — including schools — just one year after a sales tax hike that had farmers holding off on the kinds of large purchases that fill state coffers.

Farmers are cutting and haying Conservation Reserve Program (CRP) land, which is normally left alone to provide nesting cover for fledgling pheasant chicks.

The drought will likely mean fewer birds for hunters and less tourism money for counties that rely on it through the winter.

Pheasant numbers, like corn prices, were already on the decline.

State climatologist Laura Edwards said last week's rains offered some relief, but the first few weeks of August are looking dry and hotter than usual.

The corn and soybean crop might recover somewhat, but it's been too dry for too long for the state to avoid damage.

“We know that there are some impacts already that will carry through the rest of the summer,” Edwards said.

Kennebec farmer sees worst conditions since 1976

Steve Halverson raises cattle and grows corn, soybeans, spring and winter wheat and sorghum near Kennebec.

His land was outside the drought monitor's "extreme drought" area until Thursday's update, but Halverson feels like things have been extreme for quite a while.

He's had less than six inches of rain this year. The average is 18 inches.

Halverson’s father, who farmed the land before him, told him it’s the worst weather on the farm since 1976.

“In this part of the state, we’re used to it being a little drier, but this is something else," Halverson said.

Halverson cut wheat for hay early, and he expects he’ll need to turn to crop insurance for his corn, which has grown only waist-high. He’s likely to chop that to feed his livestock, too.

More:Drought causes statewide emergency

"The corn’s about done,” he said. “We just hope to get enough for silage.”

Adam Schindler farms in Lyman County, as well, growing corn, beans, sunflowers and sorghum with his father and brother on a Century Farm. They've cut their wheat to feed their 300 cattle already, and the corn "is toast."

“It’s bad," Schindler said. "Especially the grass and the pasture land. It’s rough."

Schindler and Halverson haven't sold off their cattle yet, but plenty of neighbors have.

Livestock is getting too expensive to keep, even for those who’ve turned their wheat into hay.

Halverson's got another income stream — he guides pheasant hunters on his property — but drought’s doing number on that side of his business, as well. At its 2009 high, hunters bagged 3,000 pheasants on his land.

He’s not expecting anything like a record season now.

Like Halverson, his long-term clients are hoping for rain to grow cover for the pheasants.

“I’ve got hunters all across the nation watching the weather,” he said.

Pheasant outlook: Not good

Halverson’s concern for the pheasants is underscored by a decline in bird numbers of about 43 percent in the past decade. The decline coincides with a reduction in CRP acres, from 1.5 million protected acres in 2007 to under a million acres today.

“We’ve seen about a one-third loss of our best habitat,” said Travis Runia, a senior upland game biologist at the South Dakota Department of Game, Fish and Parks.

The drought’s bound to exacerbate the declines, but it’s unclear how much. The GF&P will conduct its annual pheasant surveys during the first two weeks of August, driving through 110 different 30-mile routes.

“We hate to speculate too much until we get hard data,” Runia said.

There are reasons to suspect smaller numbers, though. The U.S. Department of Agriculture's decision to open up CRP acres to haying didn't come until after prime nesting season, but pheasants still need corn for cover. The smaller the stalks, the less space to hide.

“It gets pretty tough when you get these drought conditions. It really cuts down on places where pheasants to stay,” Runia said.

There’s a lot at stake for the state. Pheasant hunters spent $170.1 million in South Dakota in 2015, the last year for which full figures were available.

Hunters spent $9.3 million in Lyman County, which counts Kennebec residents among its 3,876 residents. In Spink County, which is also dealing with heavy drought, the take was $8.1 million.

“When you get into these small towns, they rely a lot on those pheasants,” Halverson said.

‘Plants don’t like it hot’

Opening up CRP land to emergency haying was a lifesaver for livestock owners, said Spink County's Jim Klebsch.

Klebsch farms wheat, sunflowers, soybeans and corn, but he also raises cattle, and cattle are pushing plenty of drought-related decisions in 2017.

The wheat market’s rallied, but it’s still worth more as hay at this point if there are cattle to feed.

“Feed’s getting to be more and more valuable,” Klebsch said. “From here west, you won’t even find wheat because they’ve baled it all.”

Klebsch sells some wheat as seed, so he’s had to combine some, even though yields are at 15-20 bushels per acre, down from his usual 60-70.

“It’s been so hot,” he said. “Plants don’t like it hot.”

He’s also worried about corn. He sits on the board of Redfield Energy, an ethanol plant that employs 40 people in Spink County.

“We buy 22 million bushels of corn a year, and most of it comes out of Spink County,” Klebsch said.

The plant sells 160,000 tons of distiller’s grain — a byproduct of ethanol manufacturing — for feed to area farmers.

Even if production runs were cut in half, “that would be a huge impact,” he said.

Crop insurance can keep individual farmers from catastrophe, he said, “but everybody’s going to take the losses.”

Schindler, who's looking at taking crop insurance for his Reliance-area corn crop, said it's easy for non-farmers to brush off drought because of crop insurance.

"Every farmer I know would rather take the grain,” Schindler said.

‘It’s not just yield. The price is down’

Lisa Richardson of the South Dakota Corn Growers Association is still hopeful for 2017.

Advances in drought-resistant corn have made strained conditions less damaging than they’d been in decades past, Richardson said, and adoption of soil-healthy practices such as no-till farming have made for stronger soils.

“We have corn that’s still green, and that’s amazing,” Richardson said.

Even so, Richardson’s concerned.

Crop insurance payments are figured on 10-year yield averages, and the price of corn is factored in, as well. In 2012, corn was selling for as high as $8 a bushel. The price per bushel on Wednesday was $3.85.

More:Extreme drought conditions expand in South Dakota

“What they’re insuring has a much lower value, so the coverage is worth less,” she said.

Surrounding states aren’t experiencing the trouble that South Dakota, North Dakota and Montana are, either, which means there will still be plenty of supply.

“Minnesota’s having a banner year. Iowa’s looking good. Illinois is looking okay, but we’re not,” Richardson said.

Kevin Dieter, who farms near Faulkton, said the carry-over effect of a dry 2016 has made conditions tougher on grain farmers in areas like his.

“That’s been about it. We didn’t have anything all spring, we didn’t have hardly anything last summer,” Dieter said. "One thing around here, when it gets hot and dry, it gets really hot and dry."

If it weren't for the proliferation of no till practices in Dieter's area, he doubts there would be any chance of a crop. Tilled land can't hold moisture nearly as well as no-till acres.

Drought-damaged crops stoke worry for livestock

The scramble to make hay for feed in a drought-affected area creates another concern: Livestock health.

Drought-damaged crops have the potential to carry high levels of nitrates, said Warren Rusche of South Dakota State University’s Extension program. When it’s too hot, “the plant can take it in, but can’t do anything with it,” Rusche said.

Trapped nitrogen in cut hay can be deadly for livestock, as the buildup makes it more difficult for the blood to carry oxygen.

More:Thune: Drought aid triggered for 6 South Dakota counties

“The animal ends up suffocating,” said Rusche.

SDSU’s regional extension centers can test nitrate levels, and Rusche said they’ve found some dangerously high concentrations in oats.

Wheat has tested at lower levels so far, but Rusche said it’s still a good idea for producers to test it prior to harvest.

Corn cut for silage loses its high nitrate concentrations in the fermentation process. If a farmer’s likely to lose their corn crop, Rusche says silage is the safest bet for feed.

Elevators, Main Street feeling squeeze

Silage and hay are good bets for livestock, but they don’t do any favors for local grain elevators.

Mike Rausch manages the elevator in Selby, S.D., in the heart of the state’s extreme drought conditions.

Rausch estimates that 75 percent of the wheat that would normally come to the elevator has been baled.

“What’s left standing is anywhere from 10 to 30 (bushel) an acre,” Rausch said, compared to the area’s average of 80 or better last year.

Once the corn and bean harvest begins, Rausch expects to see half the numbers he did in 2016. He’s already cut back hours for the elevator’s employees. They’ll have less money to spend in town, just like the farmers.

“The city people in this area rely on the farmer having a crop,” Rausch said. “It’s all ag-related here.”

Dieter’s combining wheat this week, and the Faulkton elevator is on his mind. He’s looking at 10 to 20 bushel per acre, but it’s a high protein crop worth selling at today’s rallied prices.

“These elevators around here they’re going to need some wheat,” Dieter said.

John Horter farms in northeast South Dakota. He’s seen all the markings of the drought — poor alfalfa crops, a short supply of hay and likely losses to the soybean crop — but he’s also seeing the impact at his Bristol-based business, Horter Restoration and Repair.

“They’re not doing the extras, and they’re not doing the maintenance,” Horter said. “They run the tires until the cords are showing sometimes.”

Low commodity prices, plus last year’s sales tax hike and now lower yields are all taking a toll, Horter said. People aren’t buying new equipment, new trucks and they’re not building new grain bins.

“It’s trickling down to our Main Street towns. There’s not the money in the area, so it’s a ripple effect,” Horter said. “It’s all starting to snowball.”

Cattle breeder sees hope, help from friends and neighbors

That the drought isn’t as widespread as it was in 2012 might be troubling for grain farmers, but it can be helpful, too.

Peggy Bieber’s a partner at Bieber Red Angus Ranch near Leola. The Bieber family’s business is based on breeding. 

They sell bulls — 400 in spring and 200 in the fall, on average — and customers come from all over the country. They also do embryo transplants and sell a handful of females in the fall.

“We don’t actually sell cattle that goes to a sale barn or a feedlot or something like that. We’re a little bit different,” Bieber said.

The widespread customer base, along with rainfall totals a bit higher last year than her neighbors to the west, have positioned the family to handle the drought well.

Customers from unaffected areas are still planning to visit the Biebers, and their friends from around the country are willing to offer help.

“We’ve had several customers from Nebraska call us and offer to sell us some hay, because they’ve had a lot of rain,” Bieber said.

Cutting corn for silage isn’t ideal, but Bieber sees a bright side to that, as well: Silage makes great feed for livestock, and a good supply will be useful as the year wears on.

Ultimately, Bieber sees the farm community pulling together to get by. Friends in Watertown offered to let the Biebers bring some cattle to their pasture to help out, for example.

The help thrown to neighbors in hard times comes back around eventually, she said.

“When there was a big fire down in Kansas, we sent some of our hay down there,” Bieber said. "That’s how the ag industry has always worked."

John Hult is the Reader's Watchdog reporter for Argus Leader Media. Contact him with questions and concerns at 605-331-2301, 605-370-8617. You can tweet him @ArgusJHult or find him on Facebook at Facebook.com/ArgusReadersWatchdog