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Dave Olson, Published December 05 2013

Drop in grower payments clouds American Crystal annual meeting

FARGO – Even though its growers will be paid about $370 million less for this year’s harvest compared to the one in 2012, the head of American Crystal Sugar Co. said Thursday he doesn’t expect sugar beet farmers to turn to other crops and abandon beets.

“I haven’t heard anyone say, ‘I’m done. I don’t need that anymore,’ ” said David Berg, American Crystal president and CEO, speaking to reporters at the Moorhead-based cooperative’s annual shareholders meeting in Fargo.

Crystal projects farmers will be paid $38 per ton this year, a steep decline from last year’s $68 per ton.

Berg said when he met Thursday morning with between 500 and 600 growers, the questions were sharp and insightful. He interpreted the large turnout on a bad weather day as a sign growers are “still very committed to this cooperative.”

But he said the payment reduction is a serious matter for growers, who he said face losses of hundreds of dollars per acre.

Berg said sharply lower sugar prices tied to a glut of Mexican sugar flooding the U.S. market and lower sugar content in the 2013 crop were main factors accounting for the fall in grower payments.

While stressing that times are tough, Berg said the drive and resilience that allowed the cooperative to reach its 40th anniversary will keep the cooperative going into the future.

He said farmers will be sharpening their pencils when it comes to figuring out planting plans for next spring. He was reminded of a saying: “Tough times don’t last but tough people do.”

Next steps

Crystal is following up its annual meeting with two special shareholder meetings on Dec. 11: at 9 a.m. in Grand Forks at the Chester Fritz Auditorium and at 2 p.m. at the Fargo Ramada Plaza and Suites to “discuss issues related to stock ownership.”

Shareholders have the right and obligation to market beets through the cooperative, so not producing during unprofitable times is not an option. The beets are needed to feed the company’s five sugar processing plants, regardless of whether farmers make money selling beets.

The Dec. 11 meetings are closed to members, but open to “legal counsel who assist shareholders with joint ventures ... if there is an American Crystal shareholder who will vouch for them,” according to the meeting notice.

Farmers are reticent to talk about the situation on the record.

A shareholder-grower at the Northern Ag Expo on Tuesday in Fargo said farmers made “plenty of money” on beets in the past three years, but now are faced with losing money.

“It would be nice to have a happy medium” for prices, he said. He predicted this will be a special problem for shareholders – sometimes retired growers – who don’t or can’t raise beets anymore but work with joint venture partners who can.

The FNCAgStock.com website shows American Crystal share prices were between $1,335 and $1,350 per share on Tuesday and Wednesday. Share sale prices hit a bottom of $1,200 on Nov. 19, according to the website.

Historically, the last time the co-op’s shares were at $1,200 was in November 2001.

Farm bill

Among speakers at Thursday’s joint annual meeting of the cooperative and the Red River Valley Sugarbeet Growers Association were North Dakota’s two senators, who gave audience members updates on efforts to pass a farm bill.

Republican Sen. John Hoeven said he is hopeful a bill can be brought before both houses of Congress in the next several weeks.

He said, however, if the farm bill becomes tangled in a larger budget fight, there is a danger it could become the subject of another extension, this time for perhaps two years.

“That’s not what we want,” he said. “We want a five-year farm bill in place, and we want that now.”

Democratic Sen. Heidi Heitkamp said she is optimistic a farm bill will be passed, and she assured sugar beet growers that if a farm bill is approved, it will contain a sugar program.

“The good news is, if we get a farm bill, the sugar program will be in there,” Heitkamp said.

“Now, we have challenges in how they administer the sugar program,” she added.

“But we’ll meet those challenges, and we’ll continue discussions with the folks who make the decisions within USDA to make sure that that sugar program works for production agriculture in our country,” Heitkamp said.

Readers can reach Forum reporter

Dave Olson at (701) 241-5555. Forum News Service Report Mikkel Pates contributed to this report.