Officials Hope to Improve Declining Rural Economy
 

By Blaine Harden
Washington Post Staff Writer
Saturday, May 7, 2005; A01
 

WINNER, S.D. -- Across the Great Plains, the story is as familiar and as mournful as the unremitting prairie wind. Rural schools are closing, small towns are dying and young people are in ruinously short supply, having run off to cities rather than stay home to take over daddy's cow farm.

South Dakota is trying to give this story a happier ending. This spring the legislature passed and the governor signed a first-in-the-nation law that catapults the state into the luxury beef business.

The goal is to reinvent South Dakota beef as a gourmet foodstuff for upscale, socially conscious meat lovers. In effect, the state intends to drive a steak -- a homegrown, environmentally correct, premium-priced steak -- through the heart of its demographic decline. If all goes according to plan, increased profits from the steaks will stay home on the farm -- and so will more of the kids.

In return, South Dakota is promising something that, so far, at least, no other cow-raising state is willing to match. Enlisting its police and administrative authority, the state guarantees consumers who buy South Dakota Certified Beef that they will be partaking of a computer-tracked cow that was born, fed and butchered inside state borders, using exacting standards of nutrition, with a humane upbringing and walled off from all possible contact with mad cow disease.

After a consumer takes home the beef, he or she can use the Internet to find a photograph of the South Dakota family ranch where it came from. And if a rancher or a butcher cheats in caring for cows under the new rules, the state is ready and willing to charge him with a felony and send him to prison for two years.

"If they lie to us, there is a hammer," said Gov. Mike Rounds (R), the idea man behind the beef law and its chief cheerleader. "We want to give consumers one of the finest dining experiences of their lives. After the eating is over, we want our beef to be a subject of discussion for the evening."

As a state, South Dakota is attempting to steer the main engine of its farm-dominated economy -- livestock -- into a small but rapidly growing specialty market for costly food that has a consumer-friendly story behind it.

Many thousands of private beef, pork and poultry producers across the United States have already made this niche market move. Iowa pork producers raise free-range hogs. Chickens in Virginia have been sprung from cramped quarters to peck around on pastures. They are part of a grass-roots revolt in farm country against the shackles of the commodity system, with its demand for cheap raw materials and its insistence on low-cost labor.

There is a growing consensus among agriculture experts that the commodity system is a principal culprit in the decades-long decline of the small family farms and the depopulation of rural areas. Those experts say that a partial cure for what ails the family farm is a shift from undifferentiated commodities to high-quality, high-value food products that give farmers and ranchers a profitable piece of processing and marketing.

"Places like South Dakota have been part of a classic colonial economy," said Fred Kirschenmann, director of the Leopold Center for Sustainable Agriculture at Iowa State University. "They export cheap raw materials and import expensive processed goods. The critical problem in these rural communities is not just adding value to farm goods, but retaining that value."

Kirschenmann said that South Dakota is the first state in the country to use its lawmaking powers to underwrite and enforce a marketing story designed to capture the value of high-end beef. That story, he says, may also capture the consumer's imagination.

"The felony thing puts teeth in it," he said. "I am not aware of any other state that has gone to that extent."

Passing a toothsome state law, though, is a far cry from creating a profitable national market, according to Allen Williams, a livestock marketing consultant with the Jacob Alliance, a Mississippi company that advises beef producers on niche marketing.

"Can South Dakota make a viable branded product? Probably. But they have got a mountain to climb," Williams said. "You are talking about a business proposition -- you can't legislate a viable business."

Here in Winner, a ranching community in the south-central part of the state, Mike Levi expects in June to sell the first batch of cows into the certified beef program.

He has waited 11 years -- since he started using a computer to track each of the 1,100 or so cows on the ranch he runs here with his father-in-law, Virgil Novotny -- to find a way of breaking free from commodity buyers who haul his cattle out of state for slaughter.

"I've been doing all the work that should differentiate me from everybody else, but I have had to sell to these buyers who are not willing to pay more," he said.

If his farm were to receive more money per cow -- and state Secretary of Agriculture Larry E. Gabriel said the premium for certified beef could be as much as an extra $20 per head -- it would enable Levi and his father-in-law to increase ranch hands' salaries by about $20,000 a year. Consumers can expect to pay about 75 cents more per pound for steaks, local meatpackers said.

As a rancher, Virgil Novotny has seen two of his grandsons grow up on the ranch, become expert in handling cattle and then leave for college. As a longtime county commissioner in Tripp County, he has seen the county empty out, with a 30 percent population loss since 1960.

"If we could pay these boys $50,000 or $60,000 a year to work on our ranches, some of them would come back," he said.

There is, though, a significant sticking point in the state's scheme to create a lucrative niche market for the 1.8 million cows that are sent to slaughter each year from South Dakota.

For the moment, at least, state meatpackers do not have to the capacity to slaughter much more than 15 percent of those cows, said Don Ward, owner of Bad River Pack in Pierre, S.D.

This, too, seems a colonial legacy of the commodity beef system. Like rural schools and small towns, packing plants across South Dakota have been going belly up for decades, as ranchers ship three-quarters of the state's cows to giant feedlots and processing plants in Kansas and Nebraska.

Reversing this trend will take time and will require state-sponsored small-business loans, which Rounds says will be made available.

In the meantime, South Dakota has no choice but to think small. No more than 50,000 cows will be slaughtered this year as certified beef, state officials say. They predict that for a least a year none of that beef is likely to be sold outside the state, except by mail order.

When the certified beef program does get up and running, a nagging question seems certain to remain: Is South Dakota Certified Beef tasty enough to deserve a premium price over steaks from any other state?

The answer, based on interviews with several out-of-state beef experts who have no financial interest in the success of South Dakota's program, is a definite maybe.

South Dakota already has a solid reputation among beef-industry insiders, according to Steve Suther, director of industry information for Certified Angus Beef, a Kansas-based nonprofit group that oversees the largest and most successful premium brand of beef in the country.

"It takes a lot of time and lot of legwork, but I think what they are doing has sound science behind it," Suther said. "All indications are that the beef from South Dakota is already above average."