SIOUX FALLS, S.D. (KELO) — Several members of the South Dakota Banking Commission expect that agricultural producers will be showing lower returns from crops this year.
They spoke about general financial conditions of South Dakota’s farms and ranches during their meeting Wednesday.
Crop producers have hit some difficulties, said Kevin Tetzlaff, president and CEO at First Bank & Trust based in Brookings.
“We’ve had some good years prior where we’ve been able to build up some capital,” Tetzlaff said.
Corn prices in South Dakota climbed as high as the mid-$6 range in 2022 while soybeans reached past $14. Last year, they brought $4.29 and $12, and 2024 hasn’t seen a turnaround.
That’s been somewhat reflected in a broader slowdown. State sales-tax receipts for the first five months of the current budget year that began July 1 were 1.1% behind the similar five-month period a year ago and 3.7% behind what the Legislature had estimated in February.
And less revenue means state government has less to spend. Governor Kristi Noem in her budget address earlier this month called for 1.25% increases to K-12 schools, healthcare providers and state government employees for the coming budget year.
Banking Commission member Steve Hayes, former president and CEO at Dakota Prairie Bank in Fort Pierre, said Wednesday that losses have been emerging among ag producers in his area.
Attorney General preparing legislation to curb corruption
“Particularly grain you’re going to see some issues,” Hayes said.
But cattle prices remain strong, and land is holding or rising in value, according to the commission’s chair, Jeff Erickson of Sioux Falls.
“That diversification has paid off,” he said.
Erickson and his wife, Linda, own part of American Bank & Trust where their son, Scott Erickson, is now president and CEO.
“In eastern South Dakota, every bit of land is going for more than the people who put it for sale thought they were going to get,” Erickson said. “The land has not slowed down at the auction level.”
Dick Westra, former president and CEO at Dacotah Bank in Aberdeen, said it’s a challenge to gather deposits from customers when the equity market produces double-digit returns, while local businesses still want to borrow. He expects lenders will see a lot of break-even balance sheets from ag producers because crop prices have dropped.
“If it’s break even,” Erickson said.
