(From Todd Epp, Northern Plains News)
South Dakota farmers and food businesses are facing a 42% price increase on chemicals needed to keep their products cold, which threatens to raise costs throughout the state’s $32 billion agriculture industry as it endures record-breaking temperatures and extreme heat warnings.
The price spike comes as South Dakota experiences a dangerous heat dome, with Mitchell hitting 104 degrees last weekend, breaking a record that stood since 1988, according to Fox Weather. The National Weather Service’s Rapid City office issued extreme heat warnings across the region, warning that conditions affect “anyone without effective cooling and/or adequate hydration.”
The timing couldn’t be worse for farmers already struggling with market pressures. Scott VanderWal, South Dakota Farm Bureau president, said in a June radio interview that soybeans are selling “well below the cost of production, with corn prices not far behind.”
Honeywell International jacked up prices on its Solstice 454B refrigerant after Feb. 15, adding $4 per pound plus a 42% surcharge. The company says it cannot make enough of the cooling chemical in America and must buy from overseas suppliers.
Trade tensions and tariffs are driving up costs for the refrigerant used in everything from meat lockers to dairy coolers.
Farms Need Refrigeration to Stay in Business
South Dakota’s agriculture industry generated $2.1 billion in cattle sales in 2019. The state ranks fifth nationally in beef cows and seventh in cattle ready for market.
All that beef needs to stay cold during extreme weather conditions. The National Weather Service warns that heat index values could exceed 105 degrees, noting this level of heat “with little to no overnight relief affects anyone without effective cooling and/or adequate hydration.” The same heat stress that affects humans also threatens food safety systems that rely on consistent refrigeration.
Farms use refrigeration for meat processing, milk storage and keeping crops fresh. When cooling costs go up during record heat, food prices follow.
“Refrigeration touches many aspects of modern life, from food preservation and transport to comfort cooling,” said Southeast Technical College, which trains cooling system technicians in Sioux Falls.
Cold storage warehouses preserve beef, pork, dairy, and crops across South Dakota’s farm country. The federal government has loaned money for more than 33,000 farm storage projects nationwide since 2000.
Repair Shops Feel the Pinch
South Dakota has 1,120 heating and cooling repair workers statewide, according to the U.S. Bureau of Labor Statistics. They earn an average of $45,000 per year, with top workers making more than $63,000.
These technicians fix refrigerators, freezers, and air conditioners for farms, stores, and restaurants. Higher chemical costs mean customers pay more for repairs.
Major repair companies like O’Connor Company in Sioux Falls and Rapid City must decide whether to charge customers more or eat the extra costs during peak cooling season.
The economic pressure extends beyond refrigerant costs. DaNita Murray, executive director of South Dakota Corn, said in March trade tensions add to farmer stress: “There’s a balance between wanting to negotiate strong trade agreements and asking those countries to come to the table to negotiate in good faith while they’re being slapped with tariffs.”
“We have absorbed the bulk of the impact to date in order to support North American growth; however, we have reached a point where the cumulative effect of increased costs of raw materials needed to meet demand for 454B is no longer sustainable,” Amanda Josey from Honeywell wrote to customers.
Scientists Work on Cheaper Alternatives
The University of South Dakota joined a $26 million government project to create new refrigerants. The goal is to find chemicals that cool just as well but cost less and hurt the environment less.
“This project will strengthen the U.S. economy in the refrigeration sector, leading the global market,” said Dr. Haoran Sun, who leads USD’s part of the research.
But new refrigerants take years to develop. Farmers and businesses need relief now.
Higher Food Prices Likely
The refrigerant shortage affects more than farms. Grocery stores, restaurants, and hospitals all need cooling systems that use these chemicals.
Honeywell also raised prices 10% on other cooling chemicals and 5% on another product line. When businesses pay more to keep food cold, those costs get passed to customers.
South Dakota’s farm economy already faces drought and unpredictable markets. VanderWal emphasized in the June interview that farmers need relief: “For many farmers, profitability now hinges on producing high yields or seeing price recovery.” Now, farmers must pay more to store and process their products during some of the hottest weather on record.
The state’s beef industry is in its 12th straight year of high prices but smaller herds. Extra cooling costs add pressure to an already stressed system during extreme heat conditions.
Higher refrigerant costs could ripple through food supply chains, eventually reaching grocery stores and restaurant menus across the region as businesses struggle with both cooling expenses and extreme temperatures.
Dairy Industry Feels the Heat
The timing particularly hurts South Dakota’s booming dairy sector, which has more than doubled to 215,000 head in the past decade along the Interstate 29 corridor, according to the U.S. Department of Agriculture.
Willem Vander Dussen, who moved his family’s dairy operation from California to South Dakota, said in a CHS Inc. publication that rising costs drove their relocation. “We saw the writing on the wall,” he said. “If we wanted to stay in the dairy business, it wasn’t going to be there.”
Now the Driftwood Dairy operation faces new cost pressures just as extreme heat puts additional strain on cooling systems essential for milk storage and processing.
Tom Peterson, South Dakota Dairy Producers executive director, said the industry worked for two decades to create “a dairy destination” in the state. Higher refrigerant costs during peak summer heat threaten that progress.
Energy Costs Compound the Problem
The refrigerant shortage hits as South Dakota businesses also face rising energy costs for running cooling systems harder during extreme heat.
Renner Corner Inc. recently invested $69,540 in more energy-efficient coolers and freezers through the federal Rural Energy for America Program, expecting to save $2,005 annually in energy costs, according to the U.S. Department of Agriculture. But the 42% refrigerant price spike threatens to wipe out those savings when systems need maintenance or refrigerant replacement.
Chad Malone of De Smet installed a geothermal heat pump system through the same program to cut energy costs by 31%, but even efficient systems require refrigerants that now cost far more to service.
Critical Shortage of Technicians
The crisis deepens with South Dakota facing an 81% shortage of skilled tradesmen, including refrigeration technicians, according to a 2020 Associated General Contractors of America survey. The state has only 1,120 heating and cooling repair workers statewide to serve the entire agriculture industry.
“Those areas often struggle to hire staff to start with,” said Laura Edwards, South Dakota state climatologist, in a recent South Dakota News Watch interview, referring to rural areas where many farms operate.
The technician shortage means longer wait times for repairs during the busiest cooling season, when farms can’t afford equipment downtime.
Research Offers Long-term Hope
While farmers and businesses need immediate relief, the University of South Dakota joined a $26 million federal project to develop sustainable refrigerants that cost less and harm the environment less, according to a September university announcement.
“This project will strengthen the U.S. economy in the refrigeration sector, leading the global market,” said Dr. Haoran Sun, who leads USD’s research contribution.
But new refrigerants take years to develop and approve for commercial use. Agricultural producers facing this summer’s record heat and price spikes require solutions now.
Federal Weather Service Stretched Thin
The extreme heat comes as South Dakota’s weather monitoring faces cuts. The National Weather Service office in Rapid City suspended regular weather balloon releases in March due to staffing shortages, operating with a 41.7% vacancy rate, according to Associated Press data.
“They’re not even able to do an overnight shift here in Rapid City anymore,” said Rep. Dusty Johnson, R-S.D., who sent a letter in May to federal administrators expressing concern about weather service cuts during severe weather season.
The reduced monitoring capacity makes reliable cooling systems even more critical for agricultural operations that can’t afford to lose products to heat damage.
Economic Ripple Effects
The refrigerant crisis extends beyond individual farms. South Dakota’s beef industry contributes $1.08 billion in added value to the state economy, while the dairy sector has grown into a $1.1 billion industry, according to state agriculture department data.
Higher cooling costs during extreme heat could force some smaller operations out of business, concentrating production among larger operations better able to absorb increased expenses.
“We don’t want our food system to become vulnerable to the same gyrations as our energy system,” VanderWal said in the June interview, emphasizing the importance of maintaining local food processing capabilities.
Looking Ahead
Agriculture officials expect the refrigerant shortage to continue through 2025 as domestic production struggles to meet demand and trade tensions complicate overseas supply chains.
The industry faces a challenging balance: investing in cooling infrastructure necessary to handle extreme heat while managing unprecedented cost increases for the chemicals that make it all work.
For South Dakota’s farmers and food businesses, the next few months will test their ability to keep products cold while keeping costs under control in an increasingly hot and expensive environment.
