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House Rejects Plan to Promote South Dakota Exports

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].

Now you know, South Dakota did have an office something like what HB 1223 proposed. Let’s flash back to 1996:

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.

16 Comments

  1. Debbo 2020-02-20

    “doesn’t think South Dakota is big enough to handle to offices promoting business.”

    Sigh. SD, you’re going to run out of feet to shoot yourself in soon. Or gift horse molars to check. Or, ……. oh, never mind. 🙄🙄🙄🙄🙄

  2. mike from iowa 2020-02-20

    One export South Dakota has an abundance of is “the stoopid,” in its choice of pols.

  3. Scott 2020-02-20

    What kid doesn’t grow up dreaming of working in a hog confinement or milking a thousand cows twice a day?

  4. Richard Schriever 2020-02-20

    The city of Sioux Falls BLOCKS access to its web site from any IP outside the US. Just sayin’. This aversion to interacting with foreigners doesn’t seem to be a partisan trait in SD.

  5. Donald Pay 2020-02-21

    In a way, I agree with Westra. South Dakota’s GOED simply has too few smart and uncorrupt people for it to be promoting trade of products made there to the world market. They would simply bungle everything. It is probably much better for businesses to set up their own office to do this work, because the crew of GOED dimwits is better suited to promoting South Dakota as the poop-pile for the nation.

  6. Buckobear 2020-02-21

    MFI — if only we could permanently export those pols.

  7. Debbo 2020-02-21

    Excellent points Don. You gave me what is probably best described as a sardonic chuckle.

  8. Porter Lansing 2020-02-21

    It must be very attractive to companies considering moving operations to SD that the state doesn’t care about helping them export things they produce.
    – Send CO a list of the stuff you want to sell. COLORADO OFFICE OF ECONOMIC DEVELOPMENT AND INTERNATIONAL TRADE We specialize in spacecraft, manufactured products, defense and intellegence software, and medical devices.
    International trade seems to be something SD is leery of so (for a small markdown of your stuff) we’ll do it for you.
    https://choosecolorado.com/

  9. Cory Allen Heidelberger Post author | 2020-02-22

    Really, Richard? That surprises me. I would think at least Sioux Falls would have the intelligence to recognize the importance of staying connected to the rest of the world.

    Now I can understand that if the site is getting lots of attacks from foreign spammers, the quickest fix is to impose that kind of mass block, because maybe legitimate foreign hits to the municipal site number only a dozen a month out of tens of thousands of local users who would be denied service by inundations of foreign probes. But there must be other more discerning approaches one could take, like blacklisting clusters of IPs on a case-by-case basis, or just blocking Russia and Romania.

  10. Cory Allen Heidelberger Post author | 2020-02-22

    Donald and Mike are right about the high level of stupid (read also: narrow vision, lack of sophistication, provincial fear of being out-negotiated by outsiders) in the one-party regime that runs GOED and everything else. Donald is right about the ease of corrupting a state-run program with no reliable oversight, as proven in the Rounds/EB-5 scandal.

    That’s why Goodwin’s proposal to hire Saba is so enticing. There’s one of the staunchest Republicans recognizing that maybe we ought to hire a Democrat to do this kind of work. Maybe we ought to have a bipartisan or multi-partisan team handling economic development, a team that would be less worried about posing for pictures to throw on campaign flyers and Tweets and enriching itself and more interested in doing the job and making us all rich.

  11. Cory Allen Heidelberger Post author | 2020-02-22

    Colorado has an office like this, too? I suppose we shouldn’t be surprised:

    • The Minority Business Development Agency, under the U.S. Department of Commerce, lists fourteen more states with international trade offices. It omits North Dakota and Colorado (oh, did we expect the Trump Administration to have complete records?), but it notes that Missouri has trade contact people in Brazil, China, England, India, Japan, Mexico, South Korea, and Taiwan.
    • The State International Development Organizations offer a directory of state trade offices. For South Dakota, SIDO lists GOED, but for contact people, they list the workforce training coordinator and the spokeswoman, neither of whom specialize in foreign trade. Per Westra’s testimony, folks finding GOED via SIDO will be redirected to call that other independent office in Sioux Falls, which will make busy businesspeople cranky. “Why isn’t the Sioux office listed as the primary contact? Why am I getting the runaround in South Dakota when I can call North Dakota or Minnesota or Iowa and speak directly to the people who can talk Among neighboring states, only Wyoming gives generic contact info for the “State Business Council”; every other neighboring state appears to offer contact info for specific foreign trade specialists.

    Did EB-5 really make South Dakota Republicans this gun-shy about pursuing lucrative deals with 95% of the world’s businesspeople and buyers?

  12. Porter Lansing 2020-02-22

    South Dakota might be open for business but it appears few leaders know anything about business. You don’t sell things to make money. You sell things to help people. If you’re very helpful you make a little bit. Remember the SD Governor who went to China trying to sell the bargain basement, mozzarella, pizza cheese? He didn’t care enough about his potential customers to learn that 80% of Asian people are allergic to milk. Any apprentice chef knows that there’s no cheese in Chinese food.

  13. Donald Pay 2020-02-22

    Yes, Cory, there are businesses in South Dakota that are connected to the world. My daughter talks about Raven Industries as one such notable example that she has been in contact with from time to time.

    In spite of what I said above, there are reasons to have a competent state agency running these international trade offices. For one, a lot of initial contacts are made with various trade offices in US embassies. The embassies find it more convenient if they have a central office in a state, for example, to direct inquiries and provide information. Of course, with Trump many of the embassies have been hallowed out to the point where they can’t provide the service they did under past presidents.

    Also, my daughter talks about the cultural proclivities of the Chinese, for example, to trust governmental authorities over NGOs or businesses for initial contacts. This is probably true in other countries, as well. They believe if it runs through a government entity, they are more likely to be getting better, more official, information they can trust. Of course, you have the EB-5 scandal that proves the opposite.

  14. Debbo 2020-02-23

    Here’s a plan the SDGOP might find difficult to mess with, agrivoltaics.

    ” a recent test in Arizona, scientists compared crops planted under solar panels with those grown in direct sunlight. They found that total fruit production for red chiltepin peppers was three times higher on the plots under the panels, and cherry tomatoes doubled production. Some of these plants used significantly less irrigation water, in part because the shaded soil retained more moisture. Solar panels placed with plants were also substantially cooler during the day — and therefore operated more efficiently — than the usual ground-mounted arrays, according to the study last year by NREL and the Universities of Arizona and Maryland.”
    is.gd/LoQYvi

  15. Richard Schriever 2020-02-23

    Cory – yes, really. A couple years ago when I was in South America (I commented here while in Ecuador) I had a need to get some information of the city of SF and couldn’t access their Web site – at all. I thought it was a local problem so rebooted, tried using a different access point. etc. to no avail. Tried it again a couple months later from Mexico with the same result. So, on return home, I e-mailed the IT folks at the city about it. Their response was just exactly that – they block access to the city site by ALL non US IPs. No specific reason was given. Just that it was their policy.

    I’ll give it a try again in a couple weeks to see if anything’s changed with the new admin.

Comments are closed.