After 20 Years Of Service, Richardson Recalls South Dakota’s Rise As Warehouse Of The World

South Dakota refers to itself as the “warehouse of the world” for U.S. corn, and Lisa Richardson, executive director of the South Dakota Corn Utilization Council, whom the Council recently recognized for 20 years of service, wants the international market to know it is open for business.

“We are the warehouse of the world,” Richardson said. “In other words, the last markets to move are us. So we have a lot of storage capacity in the state, and we are building substantially more. When there is a huge carryover in corn, a lot of that resides in our state.”

That warehouse effect is attractive to international buyers, primarily from Asia, as offering a reliable supply at the right price. As a result, USGC trade teams often travel to South Dakota. Richardson said she enjoys seeing customers from crowded countries travel to her sparsely populated but important agricultural state.

“They will get so excited; they all want to ride in the combine,” Richardson said. “It is always interesting to see their reactions.”

Beyond raw corn, Richardson said the growth in the ethanol market has fundamentally altered producers’ views on international trade. She remembers when the first farmer-owned ethanol plant in the state came online and how it was so successful that plant after plant replicated the model.

“We just mimicked that and copied that in our state,” Richardson said. “What we had was the cheapest corn in the world, so we turned lemons into lemonade.”

Richardson said the original goal was to move 20 million bushels of corn into ethanol by 2000. Today, ethanol is one of the largest markets for corn in South Dakota, utilizing 360 million bushels of corn annually. And a new farmer-owned ethanol plant with 80 million gallons of capacity was just announced, adding to South Dakota’s production potential.

The development of the ethanol industry resulted in an initial significant improvement in the basis. Now, export markets are becoming more and more important.

Richardson also admits that producers initially didn’t realize that beyond ethanol, which is now competitive in the world market, would come even more value-added co-products in the form of distiller’s dried grains with solubles (DDGS). She recalled being amazed at buyers, like a team she worked with from the Middle East, wanting this ethanol co-product independently of other feed grains.

“Our growers adopt technology, figure things out quicker because their margins are so minimal,” Richardson said. “And we built the ethanol plants to build markets locally here. But when you take the starch out, you still have millions of metrics tons of product to move out - primarily, that is exported.”

With this opportunity to serve as both the nation’s grain warehouse and a supplier of value-added co-products, Richardson’s focus on reliable transportation has grown. South Dakota’s corn primarily moves to the Pacific Northwest on the state’s single Class 1 railroad. However, as the industry has grown, so has investment into infrastructure including the construction of 16 shuttle-loading facilities and more than $4 billion dedicated to improving rail lines crossing mountain ranges as trains travel west.

As a result of the growth in corn production, storage capacity, value-added co-products and infrastructure investment, Richardson said exports - and work on international market development - are more critical than ever.

“Twenty years ago, even our politicians were not pushed on trade,” Richardson said. “The fundamentals of that have changed dramatically. Our producers know that trade matters and that we need more markets, not less.”

“We really see the opportunity in exports, and that is why the Council is such a critical part of our industry and our organization.”