North Dakota Residents Weather Downturn In Commodity Prices
ARI SHAPIRO, HOST:
North Dakota's economic fortunes have taken an abrupt turn for the worst. This is after 15 years of receiving almost entirely good news.
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JACK DALRYMPLE: It seems strange to hear that things have gone in the other direction.
SHAPIRO: That's North Dakota's Governor Jack Dalrymple announcing that the formerly booming oil state now has a $1 billion budget deficit. Low oil and agriculture prices have become a big problem. Prairie Public Radio's Emily Guerin reports on how residents are handling the sudden downturn.
EMILY GUERIN, BYLINE: How much should a farmer get paid for his wheat? It's actually a complicated question. And there's a whole laboratory at the Southwest Grain elevator in Taylor, N.D. dedicated to answering it. First, a machine shakes a sample of the farmer's wheat to remove stuff that shouldn't be in there - corn kernels, fungus. Next, a few lab tests to determine the quality - protein, moisture, gluten. Then the big moment when the farmer finds out how much he's going to get paid for a year's worth of work.
JUSTIN BINSTOCK: Four dollars and forty cents.
GUERIN: Four-forty a bushel. At that price, farmer Justin Binstock (ph) is losing money. He needs more like 6.25 just to break even.
BINSTOCK: Wheat - it's disgusting. Next year, I don't think I'm planting any of it.
GUERIN: He's only here because he needs cash to pay off some debts.
BINSTOCK: Yeah, I'm down to the bottom of the barrel here. That's why I'm bringing in the wheat.
GUERIN: Farmers across North Dakota have seen their incomes fall by a third since 2013. And that has ripple effects across this rural economy.
BRENT SANFORD: Nobody's real exuberant right now and optimistic and happy about the economy when the oil's $35 and wheat and cattle are down.
GUERIN: Brent Sanford owns S & S Motors in Watford City. It's as commodity-dependent as a car dealership can be. His customers fall into the three categories hit the hardest - farmers, ranchers and oil workers. But at the height of the oil boom, there was a lot of money in this community.
SANFORD: Everybody has switched from traditional car like a Chevy Impala, Ford Taurus to SUVs with heated leather or pickups with heated leather.
GUERIN: Now profits are down 50 percent.
SANFORD: People don't tend to make big purchases when there's that much negative news.
GUERIN: Some North Dakotans never made big purchases because they didn't trust that the good times would last. Take farmer and rancher Lorin Dvirnak.
LORIN DVIRNAK: We're down to earth. We don't like to overextend ourselves.
GUERIN: Dvirnak gets a monthly check from an oil company for the wells on his property. But he was very cautious with his oil money even before that check started shrinking. Oil prices have dropped by two thirds in the past year and half. It's Dvirnak's grandchildren who may be affected. They'll inherit the oil money one day from the wells. Wells that are named after them. There's the Naudia (ph), the Ben (ph).
DVIRNAK: They got their wells named first.
GUERIN: And the Mike (ph) and Lucas (ph).
DVIRNAK: Mike and Lucas are a little upset that they have to share a well.
GUERIN: The Dvirnaks weren't sure they'd get another oil well. So they decided to make the two boys share. North Dakota practicality, that's what's gotten this commodity-dependent state through booms and busts before.
DVIRNAK: We'll just keep going. We always have in the past.
GUERIN: That seems to be the message from Governor Jack Dalrymple too. Here he is last week announcing his plan to plug the $1 billion hole in the state budget.
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DALRYMPLE: Thanks to our strong cash reserves and the diversification of our economy, we will be able to weather this downturn in commodity prices.
GUERIN: But the state's economy isn't that diversified, not compared to oil states like Texas and California. More than 60 percent is based on agriculture and energy. The next largest sector is federal payments. That means when all the commodity prices drop like they have now, there's just not much to fall back on. For NPR News, I'm Emily Guerin. Transcript provided by NPR, Copyright NPR.