Dealing with dry times

MITCHELL, S.D. -- We in South Dakota have been somewhat insulated from the economic woes affecting the rest of the country.

There were certainly impacts in the state from layoffs during the worst of the recent recession, but South Dakota's unemployment rate always remained lower than the national average.

Experts have said South Dakota's strong agricultural sector deserves much of the credit for keeping the state afloat. During the recession, South Dakota farmers produced bumper crops and benefited from high prices. Ranchers in the state also enjoyed high cattle prices.

Now comes some disturbing news. After a couple of years of wet conditions that helped strengthen agricultural fortunes, we're suddenly experiencing a drought. A recent report from Bloomberg News says "the worst U.S. drought since Ronald Reagan was president is withering the world's largest corn crop."

Remembering the '80s

References to the 1980s no doubt make some people in South Dakota wince. We remember what farming was like during much of the Reagan era. The word "crisis" usually is used to describe that difficult time in agriculture, as in "the farm crisis of the '80s."

Could we be headed for a downturn in the ag economy that might spark a downturn in the state's wider economy? We don't know. Circumstances are different today than they were in the 1980s. Farmers and ranchers have better technology and practices, and they have a strong safety net in the form of subsidies and crop insurance. Yet, even as we write this, Congress is considering removing some of those supports in light of the recent strength of the ag economy.

The only thing we know for sure is that the future is unknown, and we'd all be wise to acknowledge that truism and act accordingly.

Agriculture's great run of the past few years has apparently convinced some people that the good times will last forever. With the prices of land, crops and cattle soaring, some people have made large investments based on long-term bets.

What's in store?

Maybe the good times will continue. Again, there's no way to know for sure.

We do know, however, that most farmers and ranchers of the early 1900s had no idea the level of financial and environmental devastation they were soon to encounter during the Dust Bowl and Great Depression. We also know that farmers and ranchers who lived through the 1980s never could have envisioned how wildly profitable some farming and ranching operations are today.

History is a great teacher if we're willing to learn, and South Dakotans have typically been good students. One of the state's primary strengths always has been the prudent and moderate nature of its people, handed down from those Dust Bowl-era forebears. The housing bubble, for example, didn't burst as badly in the state because homeowners and banks weren't as overextended as their counterparts in other states. That quality in our people, along with the strength of the ag economy, helped stabilize the state during the recent recession.

South Dakotans in the ag sector would be wise to commit themselves anew to those values so they don't overreach during the good times and risk a violent reversal of fortunes later.

Editor's Note: This editorial originally appeared in the Mitchell (S.D.) Daily Republic. The Daily Republic and Agweek are owned by Forum Communications Co.