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THE THREE DAKOTAS
No, not North and South Dakota and some other place we have forgotten about. I am thinking only of North Dakota. Of course it is happening throughout the Great Plains, or as I call them, the northern plains. There is some variation because there are differences among the states. I call it The Three Dakotas but mean only North Dakota because that is where I am from, both physically and spiritually.

As for those other states in what I call the northern plains, Minnesota is the most diverse of the four. It approaches being an industrial state. At least it is from Duluth which really does have a seaport feel to it, and then swinging south and west through the Twin Cities and Rochester and then east down to where it meets Iowa and Wisconsin

The Iron Range, along with a half dozen similar areas in the United States, is mining country. The lakes country is defined by its title. While several other states have similar areas Minnesota’s “up north” must be the biggest lake country in the U.S. It is a culture by itself. No other part of Minnesota is like the lake country.

The rest of Minnesota from the far northwest where it meets North Dakota and Canada down to the South Dakota, Iowa border and all the area not previously mentioned is farm country, some of the most productive in the United States. Like “up north” if you are familiar with farm country you know what it means. If you aren’t familiar with farm country you have a lot of reading to do. Recently I heard a lady who lives in farm country but who has no connection with farming say, “These farmers. All they ever do is complain”. She knows nothing. She understands nothing about farming.

South Dakota is like Montana in the sense that both are farm country in the east and cowboy country in the west. Not the same of course. South Dakota cowboy country is mile after mile of open range until you get to the very western edge in the center of the west boundary where you bump in the beautiful and dramatic Black Hills.

Of course the Rocky Mountains of Montana with Glacier and up against Yellowstone are what most U.S. residents think of when you say the Rockies. What beauty. What drama. How great it is.

And then there is North Dakota. We call them the Killdeer Mountains and the Turtle Mountains, but really, they are at best only respectable hills.

We do call one area hills, the Pembina Hills, but they aren’t. It is a gorge, a dramatic and gorgeous gorge to be sure, but they are not hills. Skeletons from a prehistoric fish have been found in the Pembina Hills.

North Dakota along with much of our Canadian cousins was once part of the great inland prehistoric seas. Listen to that great Ian and Sylvia folk song, The Seven Seas. That is us, 100s of millions of years before we were us.

The closest we come to honesty in our naming of a variation from the plains state we are is The Badlands. That it is, and the terms the tourist bureau uses in describing them are honest. It is a place of beauty. A special place, and truth be told, more beautiful than the badlands of South Dakota, or so I think.

So, after all those qualifiers what am I talking about when I say the three Dakotas? It is this, going back about a decade in North Dakota, before the oil boom, it is what was developing in North Dakota, and to a lesser extent because of differences among the northern plains states, what is happening in the farm country of Minnesota, South Dakota and Montana. It is what is happening because of the new technology in agriculture. The technology from the satellites that direct the tilling, planting, spraying and harvesting. Those unfamiliar with farming today don’t realize how all-encompassing this technology is. It is how this technology means that even though every acre is still farmed there are fewer farms and that means there are fewer farmers and there are fewer people who make their living by accommodating the farmers directly and indirectly.

When I was twelve years old I told my dad I could drive the combine. In the best day that meant I combined 35 acres in a day. Today if I got on that combine in the best day I could combine 250 acres. Just think how many fewer farmers that means.

Today, just push a couple of buttons at the beginning of the field and take your hands off-off everything. The satellite sets the threshing numbers, the concaves, the sieves, and the speed. It steers the combine so all 40 feet of the header are full, to the last inch. As conditions change going down that cut, so too will the combines setting.

Of course when planting in the spring that same satellite set the depth and the seeding rate. Before the seeder went down the rows that same satellite set the fertilizer rates and combinations. It did the same for the sprayer each time it went down the rows.

Impressive? Well, it gives us the biggest yields possible once that great satellite in the sky that has been there since the big bang gives up the growing degree days and the rain.

To sum it up, if you move beyond the eight or so largest cities in North Dakota and now also move out of the one fourth to one third of the state that is the oil patch you see a North Dakota that has changed dramatically, and is changing completely. If that photographer from the National Geographic thought he had some pictures a decade ago wait until the middle of this century, no, maybe only another twenty five years.

There will be fewer abandoned yards left because the land will become too valuable to leave in that state. Tear the buildings down, and rip the soil back into fields.

There is a web site called Ghosts of North Dakota. It is about ghost towns and abandoned places in North Dakota. Many are not true ghost towns because there are maybe one or two houses and even a business still occupied. However, there is not much left. It is a good website. Worth the visit if you care about our great grandparents Dakota.

If the children or maybe grandchildren of the website’s author, Troy Larson, try to continue this site they may not find much interest, at least among descendants still living in North Dakota because there will be so many old places that are relatively new every six or seven miles down the road that the visits won’t be unique.

What may be interesting is every 20 miles or so there may be a “farmstead” with storage for small grains and specialty crops. That storage, because of the costs of today’s storage bins may not look like today’s farmstead.

Instead of a 5000 to 60-70000 bushel bin that is filled at harvest and then emptied as soon as a couple of weeks after harvest only to sit there empty until next year what you might see is a circular platform with five feet or so of a hard permanent circumference. In the center of that will be a large capacity unloading system. Today systems are built to unload a1000 bushel semi-trailer in as little as two and one-half minutes. As the pile grows at that speed the unloading system keeps going up, and up and up.

Around that system is tied a “tent”, actually a new high tech cover. When the system is full it looks like the biggest Native American teepee you have ever seen. The cost per bushel is a fraction of those metal granaries of today.

North Dakota will become like many of the other prairie states. Too few people in too few places. How do you provide the infrastructure to those great unpopulated distances?

I don’t mean schools. That’s easy. Make them live in the few towns, one spouse and the kids? Or, do like Australia and deliver education over the internet.

The problem is building and maintaining the roads, and other tax supported factors. Who pays when agriculture is still an important part of the economy? Maybe not the largest, but a close second.

What happens when you need a part and a technician (we used to call them mechanics)? See that helicopter off to the southwest about 10 miles? He is on the way to this field with that technician and part. Of course if the part is too big even today most implement dealers have a boom truck that comes to the field accompanying the van that is equipped with welders, torches, air wrenches, and every other tool any respectable shop has.

Some examples of what we will look like: Colorado, what is there after you move out of that Denver-Boulder-Colorado Springs metropolis? What about Nebraska? Omaha and Lincoln. Then move 20 miles either side of the Platte and there is nothing there expect some great agricultural land, part of the Great American Bread Basket, but it doesn’t take very many people given the technology of those crops to get that cheap food to the American, and world, population.

These past half dozen or so years have been the start, but it is only the start. There will be three North Dakota’. One will be the oil patch, and it will be impressive, even if you don’t agree with it. There will be substantial changes from today’s technology, but we will be important to the United States and to the world. Then there will be the eight or so larger towns.

I say eight or so, because I am not sure what role Jamestown and Devils Lake will play. I think they will have some role because of the distance between Fargo and Bismarck, and Grand Forks and Minot. Stanley will be important because of oil. Finally, because of the industrialization north, south and east of it, so too will Wahpeton, although no larger than today, and probably smaller.

Finally, there will be farm country. That will be the most dramatic economic and cultural change of the three states within North Dakota. There will be very few people. There will be great distances. There will be technological changes so great that the tech writers will write about North Dakota then just as the energy writers and economists are writing about North Dakota today.

This is my Dakota. The Dakota farm. Mile after mile of fields of wheat. Of course in the Red River Valley it meant sugarbeet fields and in smaller numbers of farmers in the northern valley more for the individual was the potato crop.

The Red River valley became the third largest potato producing area in the United States. That happened with fresh potato stock. Then when the processing potato industry became so important, especially because of potato chips, at one time if you were eating a potato chip west of the Rocky Mountains there was two chances out of three that the potato for that chip came from the Red River valley.

North Dakota lead the nation in other specialty crops. One half of the dry edible beans (baked beans and taco beans, both) were from North Dakota. North Dakota raised more sunflowers than any other state. Today it leads in pulse crops (edible peas, etc).

Time changes all things. Potatoes are still important. Simplot’s (McDonald’s supplier) largest french fry plant is in Grand Forks. However, in total while stability has returned potatoes are a much smaller percent of North Dakota acres than they were in the 1980s.

Today what has changed in North Dakota is the very large increase in acreage devoted to both corn and soybeans across the state. Corn in now a larger crop in terms of acreage than is wheat.

In 1980 it was only Cass and Richland county farmers in North Dakota who knew that was a soybean field they just drove by. Today, as with corn, it is all over the state.

What does this mean? Given the change in technology, and the resulting increases in costs, and given the changes in the crops the North Dakota of anyone more than 50 years of age is gone, and will be changed beyond recognition. It becomes less and less so every year. The social and cultural aspects of that time is gone. That time of our great grandparents is gone. It can never be recovered. We can only hope enough of that has been saved.

 

The South Dakota data is not available yet. I am going to post this and when I can add that data I will let you know.

As for the other state listed here, first North Dakota: Unemployment is up slightly as is expected at the beginning of the summer. That is because of all the college students looking for summer jobs. The interesting statistic is that there are 11,600 more people employed in June 2014 than in June 2013.

That is a good increase, but it does also show the maturing of the oil boom. The boom is still occurring as we can see by the number of drilling rigs, etc. However, the numbers have stabilized based on the people available to work the rigs, do the fracking, etc.

As I showed in my comparison posting last week the northern plains economy is improving. North Dakota is still the “best” economy, but the other states included (Minnesota, South Dakota, and Montana) are improving, and I think at rates better than the average around the nation.

So, just look at these and see that things in the plains are continuing as we expect. What I intend to show in the near future is that the new “Great Transformation” is continuing. That is, the new agriculture technology is continuing to empty the plains. Every acre will still be farm, in fact more intensely than it has in the recent past, but it will take fewer people, both on the farms and in the towns. In less than a quarter of a century we will not recognize the plains states.

At the start of the settlement of the plains the technology of the railroad meant a town every six miles. Before the middle of this century there will only be a town every fifty miles, or so. And that’s the truth.

 

Second verse same as the verse. A little…. You remember the song, and I don’t mean to be repetitive in my comments, but I just have to say this. Although it is not a great amount the legislative forecast at the end of April is off by even more than it was last month.

In total the amount received at the end of April is nearly 9% more than forecast. Last month that figure was 7.1%. The error is nearly 30% more than last month.

You might also remember that OMB said that a lot of the problem would be solved when income tax payers, especially the corporate, sent their final tax reports in and corrected for over payments they had made. Last month the corporate income tax collections were about 42% larger than the projections. This month that figure is about 39%. That is not much. The difference for the individual income taxes is less than 2%.

In sum, individual tax collections are nearly 36% larger than projected collections, and corporate nearly 39% larger. That is a lot.

The only account that is even close is sales tax collections. That is a peculiar account to be close given North Dakota’s still booming economy, and then to miss the income taxes by so much.

Remember, both income taxes were changed and state sales taxes remained the same. Seems to me Economy.com didn’t know how to adjust for changes to the income tax, both corporate and individual.

Finally, I will note again, and hope those in charge of preparing and voting on the next bienniums budget, keep in mind these continuing errors. If not, when the economy, even the growth in the economy, slows down we will find the North Dakota budget in deficit. With the total receipts being only about 9% greater than the projections income would be about $5 million dollars short if the two income tax accounts had been correct just to this point in the biennium, or $12 million at the end of the biennium if the North Dakota economy stays like this. We easily could handle that, but if it continues through the time that will amount to a significant amount-something unnecessary.

 

Well, last month I reversed myself from the month before for Grand Forks. To put it simply, if I was going to make a statement for this month I would hope none of you would go back and look at what I said then and then I would reverse myself again.

Or as the economist say, I wish I had that third hand. Since I don’t let me see if I can add some value to these May data. Basically, it is this, the economy in Grand Forks is in flux. Oh, I know, they talk about this sector and that sector, but in the end it comes to this: yes, there is some growth because of the oil patch. In fact, there may be a few engineering, architectural, and construction firms still benefiting from the oil economy, but the go-go days are over. Today, it is just some good steady work for some good steady companies.

So, too in the retail area-for the major ones anyway. For the 80 percent of the Canadians who are still coming here they head to the big boxes and their favorite haunts as far as motels and restaurants and lounges, especially now that UND hockey is over for a few months.

For the rest, well maybe the UAVs will start to bring some big money across the economy, but as of now it is simply the motels and restaurants where those specialist stay when they come to Grand Forks. It is not a big contributor to the Grand Forks economy yet.

UND is still a good steady base, but not growing. So, to is our real base-agriculture and even that has changed. The potato industry is not nearly the size that it was from the 1950s through the 1990s. Sugar beets are big, but also not growing. Corn is the new crop but it doesn’t take the kind of personnel those earlier crops did. Farming has changed, so too is Grand Forks.

As for those other cities, again we need to remember that much of the difference in totals can be because of the amount of the city sales tax. Some are one per cent, some are two. I am not listing that here, but unless there has been a change in the amount of a cities tax from last year the percentage change among the towns tell us something.

 

Another month and another opportunity to see how fortunate North Dakota has been for these past few years, and how far off they are in the projections of revenues they have purchased.

First of all, concerning the revenues, even after some very large tax cuts put in place by the last legislative session and signed by the Governor, revenues are up by nearly 21 % compared to the same time as the last biennium.

Now that is just over 7 % of the projected amounts. Compared to what we thought we purchased some will say that is pretty good, at least compared to previous projections. However, as always, the devil is in the details, and I don’t think that is so good.

Sales taxes are off by less than 4 % and that is not bad. Auto purchases, or the revenues from them are off by less than 11 % and that isn’t bad either.

The other big categories are corporate and individual income taxes and they are off about 37 % and 42 %. That is, the revenues from these taxes are that much more than expected and yet the total revenue is only up about 7 %. That means that without those large amounts of extra revenue we would be in a deficit situation and that would be a critical situation, a very critical deficit situation. If the economy slows down with three fourths of the biennium left North Dakota will need its reserve revenues and the psychological effects of that will be very difficult on its economy.

I do not want to be the boy who cried wolf, but I think this proves again the critical need to get a better economic projection. We are, I think, living off our good fortune. We can not continue doing this, or so I think.