Sugar prices slump as beet farmers turn to planting

Published online: Apr 19, 2013
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After several years of strong prices, sugar farmers are taking their lumps, analysts say.

World production of beet and cane sugar has sent sugar prices into in a slump, a trend that doesn't bode well for Montana sugarbeet farmers along the Yellowstone River drainage, where sugar is a multimillion-dollar cog in the economy.

Earlier this month, the world market price for sugar hit 17.47 cents a pound, its lowest price in 30 months. Globally, cane and beet farmers are raising more sugar than consumers demand.

"It's really a world production story," Gary Brester, Montana State University economist, said Friday. "In 2008, production was small, 2009 wasn't much better and then it improved some in 2010, 2011 and 2012."

Acres in sugarbeets are being cut back 5 percent in Montana, according to the U.S. Department of Agriculture's Prospective Plantings report issued annually at the end of March. That puts Montana sugarbeet acres at 44,200. Farmers in key sugarbeet states were cutting back as well, except in Wyoming, where farmers expected to increase plantings to 39,000, an expansion of 23 percent.

However, there's more than market price behind the decision to plant less, said Luther Markwart, American Sugar Beet Growers Association executive vice president. Farmers have been able to harvest more tons of sugarbeets per acre as a result of Roundup Ready sugarbeets and earlier planting dates. Weather and bioengineering have added a month's worth of growing days to the sugarbeet season, which translates into larger crops.



American sugarbeet farmers will plant 19,000 fewer acres of sugarbeets this year, Markwart said Friday, but the 1.2 million acres that are planted will be very productive if the trend of the past five years holds up.

Markwart said reasons behind the falling prices are multiple. Increased U.S sugar production is part of the equation, but so is sugar production in Mexico, which is allowed to sell its sugar on the U.S. market without restriction under the North American Free Trade Act. The U.S. government estimates how much sugar will be produced by American and Mexican farmers and then determines how much additional sugar will be allowed into the United States from other countries on favorable terms.

In the past year, federal officials underestimated the amount of sugar coming from Mexico, and as a result the total volume of sugar on the U.S. market was higher than expected.

It's been hard to determine the amount of sugar coming into the United States from Mexico as soft-drink companies in that country have turned to corn syrup to sweeten beverages. As a result, Mexico has attempted to sell more sugar to U.S. buyers.