Is Idaho's sugar sector turning sour?

Published online: Jul 27, 2013
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NOTUS, Idaho-The fibrous leaves bend and crunch as farmer Mike Skogsberg wades into his sugarbeet field northwest of Nampa.

The green sea laps above the knees of Skogsberg's jeans; the crop will rise to his belt by harvest time.Sometimes the irrigation pivot wheels sink too far into his soil, leaving ruts that undercut the roots. Skogsberg prods a rut with his heavy boot, then returns to his gray pickup on the farm road.

Agriculture is booming in the Treasure Valley, but sugarbeets are not. Just two years removed from record highs, beet prices may tumble to lows not seen since the Reagan administration. Some experts doubt whether farming sugar beets can remain viable. Skogsberg, 50, brushes off such pessimism. He says experts have eulogized the Idaho sugar beet for decades.


"My grandpa raised sugarbeets," Skogsberg says. "My dad raised sugarbeets. I raise sugarbeets. I remember always hearing that sugarbeets are done, that the market is going to pot. But farmers are kind of diehard. We work pretty hard to make stuff work."

The 100-degree sun blares down on the cab of Skogsberg's Chevrolet Silverado. He steers onto Stafford Road to check on his other fields.

Sugarbeets: An Idaho staple
Sugarbeets remained Idaho's sixth-biggest cash crop last year despite lower prices and brought in $355 million in cash receipts, according to estimates from the University of Idaho. Amalgamated Sugar Co., which processes all of the sugarbeets grown in Idaho, Washington and Oregon, brings in about $1 billion in revenue each year, says company Chairman Duane Grant, a Rupert beet farmer.

Sugarbeets resemble turnips but are bigger and tougher. Idaho sugarbeets are hauled to Amalgamated plants in Nampa, Paul and Twin Falls, where they are processed into mostly white, refined sugar, but also molasses, beet pulp, beet pellets and a less refined product for animal feed, Grant says. About 90 percent of U.S. sugar is sold to industrial food producers, such as General Mills, Kraft Foods and Sara Lee Foodservice. Ten percent winds up on grocery stores for household consumption.

About 450 Idaho farmers raise sugarbeets, says Garth Taylor, University of Idaho agricultural economist. About 4,000 Idahoans are directly employed in beet farming and harvesting, and about 1,500 work in beet processing.Sugarbeet farming-and the U.S. sugar industry, for that matter-wouldn't exist if not for federal policy established in the farm bill, Taylor says.

The industry is protected by limits on the amount of sugar imported from nations like Brazil, which paid $2.5 billion in 2012 to subsidize sugar cane grown for ethanol production.

International sugar producers sell surpluses on the global "dump market," creating a glut of cheap sugar. Opening the market would be a death knell for the U.S. sugarbeet industry, Taylor says.

"It's hard for U.S. sugarbeet farming to compete with the cheap labor and government subsidies in countries where sugar cane grows like a weed," he says.

Taylor thought problems were over for sugarbeet farmers when prices hit record highs in 2010 and 2011. Now the industry again looks shaky and could make sugar production untenable even if the federal sugar support program remains in place.

"Sugar is all but gone out of Oregon, Washington and Utah," Taylor says. "Those were big sugar places, and it's gone. Sugar's teetering, and it has been for a number of years."

Amalgamated would be forced to shut down if today's low prices became the new normal, Grant says. "It's stating a reality of a capitalistic market," he says.

Harsh spring
The pickup bounces as Skogsberg drives down another dirt road running beside another Skogsberg sugarbeet field. Skogsberg grows 140 acres of sugarbeets in addition to larger plots of onions, wheat and corn. He sells his beets to the Snake River Sugar Co., a growers co-op that supplies beets to Amalgamated.

This is his ugly field, he says, pointing to several bald patches where late frosts killed seedlings. The Treasure Valley spring was cruel. A series of windstorms blew seeds out of the ground or tipped over small plants. Frosts killed more.

Co-op growers replanted a record 44 percent of their acreage this year, Grant says.Skogsberg replanted about half of his sugar beet crop, but he didn't realize plants had died in this patch until it was too late.

"We thought about abandoning the lot, but it kind of came around," Skogsberg says. "It'll be worth having."

Skogsberg says he spent about $6,000 to replant the Roundup Ready seeds. The sugarbeets are genetically modified to resist Monsanto's Roundup herbicide.

The cost to replant is marginal, Skogsberg says. The hit that comes from replanting comes from losing weeks of the growing season. Less time means smaller beets, which means a loss of five to 10 tons per acre from his average of 45 tons.

"It's real frustrating," Skogsberg says. "You see the potential out there. You'd done all your hard work to get that crop coming out of the ground. Then you have Mother Nature take it away from you. But it's also part of farming."

The University of Idaho analysts predict the average price for the coming year will be $45 per ton. Farmers anticipated the prices hitting $40 at recent grower meetings, a 38-percent decline from 2010.

Growers are committed to making sugarbeets work for the long term, says Mark Duffin, executive director of the Idaho Sugar Beet Growers Association. However, prices will need to rebound for sugarbeets to remain profitable.

"(Sugarbeets) can survive, but this puts farmers in a bind," he says. "We're right at forfeiture prices. We can work through that for a year, but after that, it gets real problematic."

So now what?
Like many small towns in eastern and southern Idaho, Sugar City near Rexburg was built around a sugar plant. After its founding in 1904, most of Sugar City's adult residents processed beets in the plant or harvested them in the fields. The players on Sugar-Salem High School's football team, the Diggers, practiced in September evenings after hoeing beets during the hot days. Sugar City's population reached 2,500 shortly after the plant was completed, according to Upper Snake River Historical Society. The plant closed in 1942. The population fell to 617.

Similar fates were met by plants in dozens of other cities in Idaho, Washington, Oregon and Utah. Amalgamated Sugar's plant in Nyssa, Ore., closed in 2005.

Farmers are used to bad years, Taylor says. But two or three bad years in a row could lead to more plant closures or limited production runs, he says, and once plants close, they don't come back.

"I don't want to give it a death wish, but it has been a worry," Taylor says. "That's where I would be very afraid of losing a piece of that Idaho industry right there in downtown Nampa."

Skogsberg says he expects sugarbeets to be around in the future. So does his son, Jason, 26, who works with his father and says he might become a fourth-generation sugarbeet farmer.

Duffin says he expects the plants to stay open, even if times are hard.

"(Closing a plant) would be a worst-case scenario," Duffin says. "I don't see that happening. (Amalgamated) is still one of the most efficient sugar companies in the world. If times get really tough, there's a lot of people who would go out of business before us."


Source: sugarjournal.com