American Crystal Sugar CEO Dave Berg sent word today to growers and employees that the co-op will see a "massive" drop in beet payments for 2013. Berg's company blog says payment will be $38 per ton of beets for the 2013 crop, compared to $68 per ton for the 2012 crop.
"The massive reduction is mainly due to lower sugar prices, but also reflects much lower sugar content in this year’s crop," Berg wrote.
This is a major piece of news for the Red River Valley. Regardless of what you think of American Crystal Sugar after the contentious lockout a couple of years ago, beet farmers are major economic driver in the Valley. If farmers have money, they spend money locally. That is good for the economy.
What Berg writes late in his blog post, though, sounds ominous:
"A drop in the beet payment of $30 per ton means that most American Crystal growers will lose money raising sugarbeets this year – in many cases, they will lose a lot of money," Berg wrote.
Here is the entire blog post:
Large drop in beet payment
American Crystal grower/owners will receive a letter today announcing a payment of $38 per ton of beets for their 2013 crop. This is down from more than $68 per ton for the 2012 crop. The massive reduction is mainly due to lower sugar prices, but also reflects much lower sugar content in this year’s crop.
We begin Factory District Meetings with shareholders in Ada (Hillsboro district meeting) on Monday morning, and continue in the other districts through Wednesday. In these meetings, we go through harvest results and factory operations so far during this campaign. We also give a lot of detail on the major drivers behind the beet payment. This year, the President of United Sugars Corporation, John Doxsie, will also be on the meeting agenda. John and his staff are in charge of selling our sugar, so I thought that it would be very helpful for shareholders to hear directly from John about what has driven the sugar market so much lower.
I finish up the meetings with topics related to Washington, including the progress/non-progress on the Farm Bill. This year, I will spend a lot of time on Mexico’s impact on the U.S. sugar market, as this is by far the major factor that has hit sugar prices, and the beet payment. We also take time for questions from shareholders.
A drop in the beet payment of $30 per ton means that most American Crystal growers will lose money raising sugarbeets this year – in many cases, they will lose a lot of money. Most of them understand that it’s the sugar market that has caused this, but they also need to know that every one of us who works for the Company is working hard to squeeze every crystal of sugar out of every beet that they have delivered to us.
American Crystal is a strong and resourceful company. No one likes to go through rough patches like the one we have ahead of us, but I feel a lot of confidence that the people who make up our cooperative will draw strength from each other, and that we will come out just fine.
(Mike McFeely is a talk-show host on KFGO-AM in Fargo, N.D. He can be reached at firstname.lastname@example.org. Follow him on Twitter @MikeMcFeelyKFGO.)