State Continues to Incentivize Dairies as Industry Struggles to Find Workers

By Mackenzie Huber

As some South Dakota dairy farmers struggle to find workers and as the state’s unemployment rate remains the lowest in the nation at 1.9%, South Dakota’s economic development office continues to approve incentives for the industry.

Two boards affiliated with the state Governor’s Office of Economic Development approved $17 million of aid for businesses this month, according to a press release from the department. Most of it was for dairy operations.

“When businesses grow in our small towns, it creates a ripple effect that strengthens the whole community,” said Commissioner Bill Even, who leads the office. “Each of these projects represents a partnership between the state, local leaders and business owners working together to move South Dakota forward.”

Drumgoon Dairy, near Lake Norden, lost 38 of its 50 employees this summer after a federal Department of Homeland Security audit flagged workers for inaccurate, outdated or incomplete proof of U.S. citizenship or permission to work in the country. Dairy audits in the state increased this year, farmers have said, and Drumgoon has struggled to hire local employees to replace the workers in the aftermath.

That hasn’t stopped state officials from continuing to direct aid to the dairy industry. Warner-based Silverstreak Dairies was awarded up to $12 million this month in Livestock Nutrient Management Bonds to build manure containment systems as part of the company’s recent $32 million expansion, which doubled its capacity to 5,400 head.

Annie Vannurden, a partner in the Warner operation, told South Dakota Searchlight it employs 30 people. With the recent expansion, Silverstreak pivoted toward more technology to address workforce shortages, including introducing a post-milking robot and using collars to monitor cows’ needs and reduce the amount of human interaction.

The Livestock Nutrient Management Bond program issues tax-exempt bonds to purchasers — typically local banks — who set the repayment terms and interest rates for the company borrowing the money. This is the first bond in the program approved so far this year.

Vannurden said the bond program helps dairy farms invest in their operations and technological upgrades rather than pay higher interest to other loan programs.

“It just shows that South Dakota cares about its dairy farms, people in agriculture and the environment,” Vannurden said, adding, “because they want us to be thoughtful and mindful and complete in our manure handling and compliance.”

Silverstreak Dairies is headquartered in Pierz, Minnesota, and operates eight dairies — the Warner dairy is the company’s sole South Dakota operation. The Warner operation was previously awarded $8.74 million in a Livestock Nutrient Management Bond in February 2024.

Two Reinvestment Payment Program grants were awarded this month to Pipestone Management. Up to $1.3 million will support the construction of a new 12,000-head breed-to-wean sow farm at Edmunds County-based Century Swine RE. Another $862,806 in grants were awarded to Miner County’s Hord Family Farms of SD to construct an 8,773-head breed-to-wean sow farm.

The state awarded another Reinvestment Payment Program grant of up to nearly $2 million to Whitewood Dairy to build a 9,500-head facility. According to a report in the Kingsbury Journal newspaper, the dairy would be in Kingsbury County, in the eastern part of the state.

The Reinvestment Payment Program offers state grants to companies to offset the sales and use taxes charged on the construction of new or expanded facilities, or upgrading equipment. The state has approved eight grants from the program so far this year totaling about $14 million.

Two South Dakota Works loans were awarded this month: $80,000 to Sioux Falls-based Driven Properties, of Driven Fire Consultants fire sprinkler design and consulting firm, to support the purchase of a Rapid City office building; and $900,000 to Social Fan, of GameDay Social, to consolidate its operations in Sioux Falls while expanding its in-house production of college athletics apparel.

The South Dakota Works program offers state loans to businesses for construction, buying equipment and general expenses. The loans are typically less than $1 million. 

The state has approved 11 loans from the program so far this year totaling $8 million.

3:49 pm — This story has been updated with a correction. The original version of the story included an incorrect location for the Whitewood Dairy, due to inaccurate information provided in a press release.

South Dakota Searchlight launched in 2022. The Searchlight is an affiliate of States Newsroom, the nation’s largest state-focused nonprofit news organization, supported by grants and donations. The staff of the Searchlight retains full editorial independence.