Michigan Sugar Company "Ten Years of Progress"

Ray Van Driessche | EXECUTIVE directordirectordirectordirector directordirector

Published in the March 2012 Issue Published online: Mar 13, 2012
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As Michigan Sugar Company celebrates its 10th Anniversary as a cooperative, we reflect back on 10 years of progress, learning from the challenges that we have faced and taking pride in the goals accomplished in the last 10 years.

Prior to the formation of the grower-owned cooperative in 2002, Michigan's sugar industry had a much different look to it. Michigan Sugar Company was owned by Imperial Sugar Company of Sugar Land, Texas, and Monitor Sugar Company was owned by Illovo Sugar Company of South Africa. There were five sugarbeet factories in the state of Michigan processing about 3.6 million tons of sugarbeets from 190,000 acres, with an average yield of 19 tons per acre, grown by 1,400 growers. The farm bill was up for renewal, the U.S. sugar market was oversupplied and sugar was being forfeited back to the government in lieu of paying back USDA (CCC) loans. Growers were being asked to destroy acres of sugarbeets through the USDA Payment-in-Kind (PIK) program to help reduce sugar inventories in a severely oversupplied market.

When growers in Michigan were notified that their respective processing companies were for sale, it didn't take long for them to figure out that if they didn't buy the sugar companies they would be out of the sugarbeet business. Michigan Sugar Company's growers formed a cooperative and purchased their company in 2002. Shortly thereafter, in 2004, Monitor Sugar Company was up for sale and it, too, was purchased with investment from both Monitor and Michigan Sugar growers. The two companies were immediately merged into what is today's Michigan Sugar Company.

 

Acquisition

Just months after the acquisition of Monitor Sugar Company, the cooperative suffered a loss of nearly $25 million due to spoilage of sugarbeets in storage piles from extremely warm temperatures combined with rain. This was a significant setback to a cooperative in its infancy and a test of stamina and commitment on the part of growers who had just become the owners of the sugarbeet industry in Michigan. As with many challenges we face, this setback in the long-term made the company stronger and leaner. Immediately, management and the Co-op Board of Directors looked at ways to avoid similar pile losses and started what was to be a long-term investment program in pile ventilation systems which have returned significant benefits.

 

Strategic Goals

Shortly after the merger, it became evident that management and shareholders alike realized the benefit of long-term strategies and reinvestment for the future, and that has been especially evident on two fronts. The first, focusing on improving and advancing agronomic practices through research by Michigan Sugar Company's research staff and through Sugarbeet Advancement working in conjunction with on-farm cooperators. Beet seed variety selection and improved disease control have resulted in higher yields and a higher quality sugarbeet going in to the factories. The Cooperative's Ontario growers were on the cutting edge and the first in the North America to use the Ropa Tiger self-propelled beet harvester and the Maus cleaner/loader system starting in 2002. After seeing the advantages of the European equipment, Michigan growers began using this technology starting with the Roggenbucks of Harbor Beach purchasing their first Ropa harvester in 2003, and just two years later buying a second harvester. The cooperative's 2012 harvesting season is expected to see as many as 15 Ropa Tiger self-propelled harvesters working in Michigan and four more in Ontario. There will also be nine Maus cleaner/ loaders systems being utilized in Michigan and three in Ontario. Harvesting techniques on the farm, improved methods of handling and delivery of sugarbeets, and improved storage have all played a major role in a higher quality beet to be processed in our factories.

The second long-term strategic goal is to decrease energy usage and increase extraction rates in all of the factories. Significant gains have been, and continue to be, achieved through smarter usage of current technology processes where possible and through staged investment in new equipment over a period of years. As a result, a 30 percent savings in energy costs have been achieved in the factories over a 10-year period directly related to increased efficiencies.

 

Current Situation

Today, Michigan Sugar Company, the sole sugar company in Michigan, is owned by just over 1,000 members. There are four sugarbeet factories in the state processing about 4 million tons of sugarbeets from 162,000 acres, with an average yield of 25 tons per acre.

A company-wide average yield of 28.9 tons per acre in 2008 established a new high-yield benchmark to shoot for as an average yield and the Cooperative has implemented a long-term agronomic program called, "On the Road to a 19% Sugar Content."

In 2006, Michigan Sugar Company, while a relatively new cooperative, celebrated its anniversary of 100 years in business with much pride and reflection. The foundation of the Michigan sugarbeet industry for over 100 years has been the farm families, many of them centennial farms that have depended on sugarbeets in their rotation to be the "mortgage payer." Now the current members of Michigan Sugar Company are looking forward to passing on the rich heritage that was passed onto them by their fathers and grandfathers.