In 1881, farmers in Yankton County established the first alliance in Dakota Territory, following the lead of Milton George, editor of the Western Rural, who denounced railroads as discriminatory and supported the National Farmers’ Alliance. A sharp decline in wheat prices in 1884 spurred widespread unrest, leading to mass meetings in Clark, Huron, Mellette, and Redfield, where farmers demanded railroad regulation. In response, a territorial railroad commission was created in January 1885, though opposition left it powerless to set freight rates. The movement gained momentum in February 1885, when alliance delegates from 11 counties met in Huron to form the Dakota Farmers’ Alliance, affiliating with the national organization. By mid-summer, the number of local alliances in the territory had tripled, reflecting the growing strength of the farmers’ movement.

Journalist Isaac Newton Gresham founded the Farmers Educational and Cooperative Union in Point, Texas, in 1902 to protect and promote the interests of family farmers. The organization expanded nationally in 1905.

The Farmer’s Union was introduced to South Dakota around 1914 by former members of the Nebraska Farmers Union who had relocated to the state. Early organizational efforts in South Dakota were driven by Farmers Union officials from Nebraska.

On March 16, 1917, the South Dakota Farmers Union was officially established as a state unit during its first state convention in Mitchell. The convention brought together 268 delegates representing 14 counties, reflecting the organization's growing presence. By this time, 134 local chapters had been formed across the state.

Education has been a cornerstone of the South Dakota Farmers Union, pioneering programs that were later adopted by other state units. In its early years, the Union played a crucial role in collective purchasing, helping farmers acquire essential supplies such as flour, coal, and twine.