Is South Dakota’s business model pure crap?
We threaten, bribe, and finally just dissolve the power of counties to promote factory feedlots to churn out meat, milk, and manure. We get Californians to come slurp that poop into natural gas generators. Yet on the same day that the Senate State Affairs Committee votes 6–3 to force open South Dakota counties for more CAFO business, the House State Affairs Committee votes 9–4 to kill an opportunity to open South Dakota for far more diverse business.
House Bill 1223 would have created an international business and trade office in the Governor’s Office of Economic Development. Prime sponsor Representative Michael Saba (D-9/Hartford), who has worked in international relations all his life and who on his own initiative brought an Egyptian trade delegation to South Dakota to check out our farm products last fall, proposed that the new GOED suboffice advocate for South Dakota exporters, research and promote export opportunities, identify and rectify whatever stands in the way of South Dakota’s access to export markets, and stage trade missions. Rep. Saba didn’t appropriate any money for this project; HB 1223 opened the door for interested business partners to support the effort with donations.
North Dakota has such an office; the North Dakota Trade Office has a website and everything. Founded in 2004, the NDTO operates as a public-private partnership funded partially by but officially outside of state government. This year they are coordinating a trade mission to Dubai and Egypt, recruiting international visitors to a “Big Iron Farm Show” in Fargo, and lining up a trade mission to Japan focused on value-added agriculture, energy, technology, and foreign direct investment. Rep. Saba enlisted the NDTO’s new exec Drew Combs to call in and say South Dakota could create a similar office. Combs noted that when the Chinese decided to buy more U.S. soybeans last year, a North Dakota producer got a call from a Chinese buyer with an “astronomical” order, and NDTO was able to help him find the resources he needed to talk turkey.
GOED chief Steve Westra said his office already refers international inquiries to the International Trade Center in Sioux Falls (which put some pictures and links on a Facebook page last March but doesn’t have much other independent Web presence) and doesn’t think South Dakota is big enough to handle two offices promoting business. He said Saba’s Egyptian trade visitors had a good trip thanks to the efforts his office and other economic development groups in the state are already making. Commissioner Westra said international trade is not among the top three issues (workforce, available housing, skills gap) that companies bring up to his office.
Representative Saba said international traders have trouble finding the Sioux Falls office Westra touted and have trouble getting answers when they do. The ITC appears to be folded into something called “South Dakota Port,” which appears to be more about the logistics of flying goods in and out of Sioux Falls than about seeking out business opportunities and connecting South Dakota producers with global buyers.
Rep. Jon Hansen (R-25/Dell Rapids) said he hadn’t heard of the ITC just down the road from his house. Representative Tim Goodwin (R-30/Rapid City) also noted that he didn’t know GOED had an international trade office. Rep. Goodwin recommended that GOED perhaps should hire Representative Saba to bring his energy and enthusiasm to that office—”What a great ambassador for the state!” Goodwin said from the dais.
Speakers floated various numbers about international trade during the conversation. The Census Bureau reports that, in December 2019, South Dakota exported $103.1 million in manufactured commodities and $13.8 million in non-manufactured commodities, while North Dakota exported $310.6 million in manufactured goods and $279.6 million in non-manufactured goods. Add in re-exports, and for all of 2019, North Dakota exported $6.749 billion in commodities, 4.98 times more than South Dakota’s $1.354 billion in exports. And that huge advantage didn’t come just from the luck of the Bakken: reading from those same stats, Combs said oil exports constituted $2.8 billion of North Dakota’s exports. Even without that fracking oil, North Dakota is somehow out-hustling us on the global market 2.9 to 1.
But when opportunity knocks, the South Dakota Legislature balks. Republican Reps. Jensen and Goodwin and Democratic Reps. McCleerey and Smith voted for HB 1223, but the rest of the Republicans on the panel said South Dakota isn’t that open for business.
Representative Saba found the killing of HB 1223 disappointing but vows to keep applying his own energy to connecting South Dakota with international trade:
The House State Affairs Committee sent House Bill 1223 to the 41st day on a 9-4 vote, effectively killing the bipartisan proposal co-sponsored by over 20 members of the legislature. HB1223 would have created an International Trade Office in South Dakota, spurring economic growth and assisting South Dakota businesses in breaking into overseas markets. While South Dakotan producers create excellent products at great prices, North Dakota does four to five times as much international business as South Dakota without even taking into account the oil trade. According to data gathered by the United States Census Bureau, South Dakota’s total share of the United State’s exports was just 0.1%.
“We had 24 cosponsors for this bipartisan bill, both Republicans and Democrats. Businesses and farmers across the state were asking for an International Trade Office, but we couldn’t get it done today. South Dakota’s producers need help extending their business into overseas markets, and I will continue to champion the cause despite this setback” stated Representative Saba. “South Dakota needs assistance from the federal government on matters of foreign trade, but we have been unable to receive any meaningful guidance from Washington. While I will keep fighting on behalf of farmers and small businesses in Pierre, I hope our federal representatives can pick up the slack and do something to support our local economy”.
Representative Saba went on to comment that despite this setback he will continue to lead foreign trade delegations through the state. Representative Michael Saba has already arranged two trade delegations to occur in the coming months: one from Saudi Arabia, which has recently become the third largest importer of South Dakota goods, and Egypt, a top-ten importer of South Dakota goods [Rep. Michael Saba, press release, 2020.02.19].
The South Dakota International Business Institute (SDIBI) is making it easier for some state businesses to get on the global map.
A cooperative effort between the state and Northern University in Aberdeen, SDIBI supports state and federal agencies and regional businesses in their efforts to enhance international business in the region. SDIBI sponsors workshops and conveys information about international business opportunities and activities through a computer bulletin board and newsletter. In addition, a certificate of recognition in international business is granted to those who attend a series of classes and seminars.
SDIBI also works directly with businesses as an export agent to produce export feasibility studies for individual companies, establish international distribution channels, plan international marketing programs and prepare the necessary paperwork before exporting can occur. “We’re closing the gap between academia and business,” says Joop Bollen, SDIBI director. “Business people say, ‘What do they know, they haven’t done it.’ But we have shipped cars to Romania and tea to Switzerland,” Bollen adds [Kathy Cobb, “Northern’s International Business Institute Moves State Products Abroad,” Federal Reserve Bank of Minneapolis, 1996.01.01].
Of course, we all remember what happened to my neighbor Joop‘s SDIBI. Maybe the old EB-5 experience left such a bad taste in the SDGOP’s mouth that the guy who turned SDIBI into the EB-5 scam, then-Governor, now United States Senator Marion Michael Rounds, has put GOED under orders not to risk any trouble with those darn foreigners that could lure decent South Dakota officials into Philippine go-go-bars. (Or, if I may put on my Sam Kephart hat, maybe the Chinese Triad was so mad about getting hosed by Rounds’s EB-5 pirates that said Rounds would end up like Benda if South Dakota ever meddles in foreign trade again!)
Whatever the case, I guess we’ll have to wait for a Republican to sponsor a bill like HB 1223 to see any serious state initiative to open South Dakota to foreign business.
While GOED chief Westra spoke to dismiss HB 1223, Governor Kristi Noem herself went to Senate State Affairs to push her pro-CAFO bill, SB 157. She used this unusual personal gubernatorial intrusion into the Legislative process to say that more meat-milk-manure factories are the way to keep kids from leaving our state:
“I invite you to imagine a South Dakota where grandparents aren’t saying goodbye to their grandkids,” Noem said. “Instead, the next generation is staying here at home because all our communities are growing and thriving” [Shannon Marvel, “Noem’s Planning and Zoning Bill Passes Through Senate Committee,” Mitchell Daily Republic, 2020.02.19].
I just can’t imagine that grandkids who are already so dismayed by their local job prospects that they are considering moving away from their grandparents will take a deep whiff of giant deregulated factory feedlots with massive manure lagoons and say, “Ah! That’s the smell of home! I’m staying!” It will take a far broader array of economic opportunities to not just keep our kids here but convince everyone else’s kids to come join us here.
Yesterday’s votes for “streamlined” CAFO regs but against promoting international trade show myopia of the Governor and most of her party.
But with or without the Governor or the Legislature, Democrat Michael Saba will use his own broad vision and sweat to make Governor Noem’s words a reality and show 95% of the world’s consumers that South Dakota may be open for more business than CAFOs and crap.