|Rooted for success, Part 1: Sioux County's ag heritage spurs economic vitality|
|February 13, 2012|
|SIOUX CENTER, IA. — If manure smells like money — and in February 2012 the commodity markets say it does — then Sioux County is the wealthiest place in the state.|
Truckloads of cows and pigs rumble south every day on U.S. Highway 75 on their way to slaughterhouses in Omaha and Dakota City, Neb. Profit flows back into the towns of Rock Valley, Hull, Sioux Center and Orange City.
Something more than a livestock boom is going on. There’s an industrial revolution in Rock Valley, where commuters travel from 66 zip codes to churn out hinges, valves, tractor parts and backhoe buckets. Scientists at firms in Sioux Center explore animal genetics, sorting eggs and sperm to improve herds and clone animals to find cures for human diseases.
In a state where small towns are losing their factory jobs, their Main Streets and their people, this part of the northwest corner of the state is moving in the opposite direction. Dollars earned from cattle and hogs have fertilized a field of innovation and growth, and the recovery is blooming.
More: Photos, plus other stories in this occasional series exploring Iowa after the Great Recession.
Unemployment here was 3.6 percent at the end of 2011, two points below the state average and less than half the national average. The population grew 6.7 percent in the 2010 census, 63 percent faster than the rest of the state.
Sioux County has two four-year liberal arts colleges and a community college, four hospitals, and a robust system of public and private schools.
“They have embraced livestock production as a way of life, and it’s benefited them. They’ve also built up advanced manufacturing, and a commitment to entrepreneurship and re-investing in new biotech companies,” said Debi Durham, director of the Iowa Department of Economic Development. “They really are a very open community in the way they seize opportunities, and again, they just think big.”
President Barack Obama visited Cedar Rapids a day after his State of the Union address to talk about jobs, and to lobby for tax code changes he hopes will stimulate manufacturing in the U.S. He could just as well have visited here.
As Clint Eastwood said in a Chrysler ad during the Super Bowl, “It’s halftime in America” — time to regroup and figure out how to rebuild the economy. With a mix of feedlots and biotechnology, Christianity and capitalism, hard work and higher education, Sioux County is showing the rest of Iowa that it can be done.
The margins game is played out here
Kent Pruismann owns one of those farms where aesthetics takes a back seat to business. The front yard is dominated by a 6,000-ton brownish mountain of ground-up corn and corn cobs covered by a tarp. The side yard is a feedlot. Cows shuffle forward to stare when a car pulls up.
Inside the front porch is Pruismann’s office. Dreamy paintings of cattle and cattle drivers decorate the walls, and he sits in his socks between four computer monitors.
Pruismann is 61, and about 6 feet 5 inches tall, with a tousled head of white hair and a quick grin. For 32 years, he worked in baggage handling for the airline industry; 22 of those years he also ran the cattle, hog and corn farm south of Rock Valley.
“He’s on fire,” said Phil Kooima, a businessman in town. “Probably slept three hours a night for years. That’s the kind of drive some of these guys have.”
Times are good for Pruismann. He employs four men on the sprawling feedlot and the hog confinements scattered along quiet country roads nearby. The cattle in the yards stretching to the south arrived from Montana in the fall weighing 650 pounds each. Pruismann will sell them when they weigh 1,400 pounds, once that pile of roughage in the front yard is gone.
The business is a margins game, keeping cattle comfortable so every pound of feed brings maximum return on investment.
“How many pounds of feed did it take me to get one pound of beef?” Pruismann said. “That’s my whole goal.”
Cattle farmers watch the commodities markets, but they also keep tabs with each other via text message on specific sale prices. One sale can trigger a flurry of transactions on an otherwise quiet afternoon when buyers from the meatpacking plants realize they need more cattle for the killing floors.
Pruismann could sell beef for about a dollar a pound at the end of 2010, then the best price he’d seen in nearly a decade. But drought in the Southwest has cut the U.S. supply of cattle to its lowest level since 1952. Pruismann and his buddies have a real leg up on the buyers. In January, he sold a shipment of cattle for $1.25 a pound, fired off a text message, and watched identical sales by other farmers in the area ding his phone for the next 15 minutes.
“Texas inventory is short,” he said with a smile. “Everybody knows that.”
Why livestock? Look at geography
Livestock farming, now northwest Iowa’s chief asset, took hold in the region because of a geographic problem. The area was too remote to easily get grain to market. Farmers either had to truck their crops to a barge on the Mississippi River or load it on a train headed west to the Pacific Ocean.
Neither option was cheap, and the Missouri River wasn’t well suited for barge traffic, so farmers in western Iowa, southeast South Dakota, and eastern Nebraska started feeding their grain to livestock. “That’s how the culture of livestock production started,” said John Lawrence, director of agriculture and natural resources extension at Iowa State University.
When grain prices rose dramatically in the farm bubble of the 1970s, farmers in other parts of the state abandoned raising livestock for the relative ease of row crops. Northwest Iowa then dominated cattle and hog production in the state, Lawrence said.
What had been a geographic disadvantage has become an advantage. Farmers and ethanol plants want to sell their grains nearby, so feed costs are generally lower in northwest Iowa than in other parts of the country, Pruismann said: “I don’t care what the price of corn is.”
History with livestock, or at least olfactory numbness, gives residents patience with the odor, which blows regularly into town. The subject prompts heated debate in other parts of Iowa, but not here.
“Most often it’s pretty tolerable,” said Paul Clousing, city manager of Sioux Center. “You realize that’s what’s going on here. It’s part of our heritage, and what makes Sioux County successful.”
Cows and pigs outnumber people 44 to 1. In 2008, the last year for which the USDA has numbers by county, the headcount was 1.2 million hogs. Farmers in the county raised 330,000 head of cattle in 2011.
The land cranks out wealth, and land prices have risen correspondingly, according to ISU Ag Extension. Farmland in Sioux County sold in 2011 for an average of $9,419 per acre, more than all but one other county in the state — neighboring O’Brien. The state average was $6,708.
Branching out from the ag base
Pruismann gets a lot of “windshield time,” he says, driving four hours each way to Ames for Cattlemen’s Association meetings. That monthly trip through towns with “nothing but a Casey’s and a grain elevator” has led him to a conclusion about the rural Iowa economy.
“Where there’s no livestock, there’s no economic activity,” he said.
The conclusion happens to be self-serving, but it’s the consensus in Sioux County. Cattle yards and hog confinements require loans, feed and ethanol byproducts for the animals to eat, veterinarians and nutritionists to keep them healthy, truck drivers to drive them to slaughterhouses, and contractors to build and wire buildings, repair fences and pour feedlots. Livestock farming generates paychecks for feed mill workers, auctioneers, stock trailer builders and equipment mechanics. A councilman in Sioux Center once called this the “flywheel effect” — dollars compounding and gaining speed with each transaction.
The industries that serve livestock farms in Sioux County have grown, multiplied, evolved, grown, and multiplied again over the past 40 years. A cluster of biotech companies has sprung up in Sioux Center, led by Trans Ova Genetics, a firm born in 1980 when veterinarian David Faber branched out into embryo transfer. The business now employs 160 people.
Trans Ova is part-owner of Exemplar Genetics, a firm that raises and clones pigs for research into cystic fibrosis, heart disease, cardiac arrhythmia and cancer. Exemplar was founded in 2008 by John Swart, a graduate of Northwestern College in Orange City.
Other biotech firms in the area include Sioux Pharm, Sioux Biochemical, Hematech Inc., and Boehringer Ingelheim in Sioux Center, plus Van Beek Natural Science in Orange City.
Biotech innovation in Sioux Center started with livestock, Swart said, and has grown as farmers and farm-related entrepreneurs have tried to extract more wealth from the county’s black soil.
“It all goes back to the successful agricultural base,” Swart said. “We’re gene jockeys trying to change the genome of pigs, but raising a pig is raising a pig. We just sell our pigs for thousands of dollars apiece instead of hundreds of dollars.”
Lessons learned have fueled growth
An industrial park is not an uncommon strategy for economic development. What’s unusual about Sioux Center’s is that it worked.
In 1970, a few years after city leaders and business owners banded together to buy 80 acres of land to nurture and attract new companies, the town’s largest employer was a creamery that provided 60 jobs. A group led by the mayor and an electrician named John Franken decided to buy land north of town, get on the phones, and try to attract some new businesses.
“A lot of communities will buy 40 acres and say ‘That’s our industrial park,’ ” said Clousing, the city manager, who was there. “These folks have gone out and put the investment into developing the land and doing the hard work of trying to attract somebody to come in and put together a proposal that makes sense.”
Clousing said the deals require not only public and private investment and hard work, but also a cooperative spirit, a willingness to work together. Bankers and business owners, educators and officials throughout the county echo the same theme.
“There are always concerns and maybe dissenting views, but rather than blowing that way up, it gets worked through,” Clousing said. “You might not agree with 100 percent of it, but hey, we’re going to move together on this. I think that’s a real key.”
The industrial park has worked. Today a dozen firms are at least as big as the creamery had been, including Interstates Co., Franken’s company, which designs and builds electrical systems for companies across the U.S. The town boasts 2,200 jobs making pharmaceutical products, small electrical motors, suspension systems for trucks, and microwavable bacon, among other things. The city had 2,500 jobs before the mortgage meltdown, Clousing said, though unemployment didn’t rise above 4.8 percent in the past five years.
Business has grown outside the park, too. Sioux Automation started 50 years ago as an ag equipment dealership. Now the firm builds feed mixers the size of wagons and fits brand-new heavy-duty trucks with cranes and bright white steel cabinets. The company projects $30 million in revenue in 2012, buoyed by the booming ag economy and the oil rush in North Dakota. Up in Rock Valley, the city has roughly 1,200 jobs at machine shops, more than one for every three residents.
Even the work force, which professes to be high caliber, attributes its quality to livestock farming, arguing that people who grow up raising cattle and hogs learn how to solve problems, fix things and run a business.
“They know what it is to work, they know what it is to not work — things don’t get done,” Clousing said.
The place is a favorite topic of Steve King, the congressman for western Iowa since 2003, who calls himself a longtime Sioux County admirer.
“If I went to sleep and woke up in a park in one of the towns in Sioux County, I would think I’d died and gone to heaven,” King said. He says it succeeds because of strong families, competitive schools, capable leaders, geographic loyalty, good colleges, patriotism and Christianity.
But it all starts, for King, too, with cows, pigs and corn. “It’s the churches, the work ethic, the belief in free enterprise, the educational component,” King said. “That’s all built upon the foundation of some of the best farmland in the world."
Des Moines Register February 12, 2012