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Jonathan Knutson, Forum News Service, Published May 22 2013

Weather, prices hurt sugar industry

GRAND FORKS – A tough year in the sugar beet business became even tougher this week.

Heavy rains in the northern Red River Valley will further slow sugar beet planting and could allow American Crystal Sugar Co. growers to plant only 430,000 to 440,000 of the 458,000 acres originally planned, officials of the Moorhead-based farmer-owned cooperative said.

The weather woes come on top of low sugar prices, a recently concluded lockout of union workers and other challenges in Washington to the U.S. sugar program.

“It hasn’t been an easy year,” said David Berg, American Crystal’s president and CEO.

Berg and several other American Crystal executives met Wednesday with the Grand Forks Herald editorial board.

World sugar prices were high in 2011 and 2012 because of drought in several major sugar-producing countries and tight worldwide inventories. But prices dropped sharply after big U.S. sugar beet and sugar cane crops, as well as a big Mexican crop, led to large world sugar supplies.

“There’s an absolute glut, a surplus” of sugar on world markets, Berg said.

Because of the lower prices, American Crystal estimates that its growers will receive $40 to $45 per ton for their 2013 crop. That would be down from $63 per ton for their 2012 crop.

As of Wednesday, American Crystal growers had planted an estimated 372,000 acres. Farmers south of U.S. Highway 2 generally are wrapping up planting. Producers north of the highway, however, were delayed by a late, cold spring. Heavy rains in the past week make things even worse, cooperative officials said.

Growers are legally obligated to continue trying to plant their sugar beets until June 10, said Jeff Schweitzer, American Crystal spokesman.

The projection of 430,000 to 440,000 planted acres is just an estimate, cooperative officials said.

On April 13, union employees of American Crystal approved a new contract. They had been locked out of their jobs since August 2011 over contract disputes.

Union workers will be reintegrated into the factories on Tuesday, Berg said.

Berg, in discussing difficulties in the sugar business, pointed to efforts in Congress to revamp the U.S. sugar program. Under the program, imports of foreign sugar are restricted. Supporters say the program provides a reliable supply of high-quality sugar at affordable prices. Critics say it inflates U.S. sugar prices.

Recent high sugar prices intensified opposition from critics of the U.S. sugar program. They include big users of sugar and free-market advocates such as the Cato Institute, Berg said.

“It’s made their resolve very strong,” he said.

After Berg met with the Herald editorial board Wednesday, the Senate voted against an amendment to the U.S. farm bill that would have made changes demanded by sugar program critics.