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SD Leads Nation in Ag as Share of GDP, Still Less Than 6% of Economy and Jobs

KELO Radio’s Todd Epp notices an article from Commodity.com that says South Dakota derives a larger portion of its economic output from agriculture than any other state. But even in South Dakota, agriculture still produces only 5.78% of our GDP and only 5.07% of our jobs.

Only six other states—Nebraska, North Dakota, Iowa, Idaho, Montana, and Kansas—get more than 2% of their GDP from agriculture. Minnesota has the 11th-highest ag share of GDP at a mere 1.27%. Nationwide, agriculture, one economic sector without which we absolutely could not survive, generates only 0.63% of our economic output, a decline from a recent historical max of over 3% in the early 1970s.

Frank Moraes, "US State Economies Most Dependent on Agriculture," Commodity.com, 2021.08.12.
Frank Moraes, “US State Economies Most Dependent on Agriculture,” Commodity.com, 2021.08.12.

Commodity.com notes that the decline of agriculture’s share of the nation’s GDP doesn’t come from food being less valuable (I love a good pizza now as much as I did in the 1970s, when Skipper’s and the Madison Pizza Hut produced the best food my four-year-old tummy knew). Rather it results from the diversification of the modern economy:

Farm employment has steadily decreased in the postwar era — as far back as the BEA’s data goes — but really for more than a century. This started when America moved out of rural areas and into denser, more economically varied communities following the Industrial Revolution.

The growth of manufacturing and other industries resulted in fewer people working on farms. This trend has continued in the modern era even more rapidly as agricultural processes have become more efficient and economic opportunities in other sectors have grown.

Agricultural activities have also dropped as a share of GDP in recent decades. After reaching nearly 3.5% of GDP in the early 1970s, farming today represents just 0.63% of the economy. One of the reasons for this decline is that farming’s economic value has simply been outstripped by growth in other sectors [Moraes, 2021.08.12].

That observation suggests a corollary: South Dakota remains in the mid-20th century with the outsized role agriculture plays in our economy perhaps because we have failed to diversify our economy as much as places like Minnesota.

5 Comments

  1. Porter Lansing 2021-08-26 13:29

    An economy is the child of the collective mindset.

    South Dakota majority’s aversion to change is why you’re seventy years behind modern.

    It’s ironic projection that white Dakotans scorn Indians for living off handouts and lacking ambition.

    Indian culture is publicly ahead of white culture in SD and white people take much more in Federal handouts.

    It’s whitey that’s lazy and sauntering down the “easy road” while America serves as the enabler.

  2. O 2021-08-26 14:51

    Does this mean that SD is a poor, agricultural state is a myth? Is it as Cory states “we failed tot diversifiy our economy” or that we fail to recognize how diverse our economy is? For only being 6% of the economy, our state’s well being seems to make YUGE lurches based on crops doing well or not doing well.

    This is the seed of information that ought to crack open a discussion on the fairness of property taxes burdens.

  3. Arlo Blundt 2021-08-26 17:39

    Well..the numbers are a pretty stark reminder of just how much of an economic backwater South Dakota really is compared to the country as a whole. The Drought will have an impact and if it doesn’t end (and most droughts stretch on for years) will result in another rural shake out.The center of the state is becoming like Eastern Montana, The Big Empty.

  4. Cory Allen Heidelberger Post author | 2021-08-27 11:45

    That’s a good point, YM: Out of $3.174 billion in GDP, $1.3B—41%!—comes from socialism. So really, actual hard-working capitalist market activity, not counting farm welfare checks, contributes only 3.4% of South Dakota’s GDP.

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