Sugar Companies Deal with Freeze Effects

Published online: Dec 02, 2019 News Mikkel Pates
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Source: AgWeek

American Crystal Sugar Co. on Nov. 21 completed its last of five factory district meeting, projecting a payment for 2019 crop beets that is down 32 percent from the previous year's final payment.

Tom Astrup, president and chief executive officer, tells Agweek that more than 1,000 farmers attended meetings that went longer than typical because of the difficulties with the 2019 crop. The company's annual meeting is Dec. 5 in Fargo.

In the factory meetings, Astrup announced a payment of $37 per ton payment, a sharp reduction from the $54.78 per ton paid on the 2018. The company will subtract $3 in "unit retains," an amount withheld as an "equity contribution" from members and historically repaid after seven years.

Astrup said the post-harvest district meetings went longer than usual and members were "spirited, financially stressed" with the difficult year. "On average, they're going to lose money on their sugar beet crop and times are challenging with everything else they're producing as well," Astrup said

Before rain and snow on Oct. 10-12, the Moorhead, Minn.-based farmer-owned cooperative had harvested 3.4 million tons of beets The company was forced to call it quits at 7.5 million tons, which is 66 percent of the 11.3 million tons that had been anticipated.

Farmers who could not harvest are being assessed "fixed costs" of $343 per acre, per acre on any unharvested acres. Farmers in the East Grand Forks, Minn.; Hillsboro, N.D., and Crookston, Minn.,, factory districts were all in the 50 to 60 percent complete range, while Moorhead and Drayton was more in the 80 to 85 percent range.

"We have less sugar to ship to our customers than we'd like to have," Astrup said, "but we'll be back next year." He emphasized that the company "as a whole is in sound shape" even though the results of this crop is negative for the co-op and its members.

American Crystal markets sugar in a pool arrangement called United Sugars Inc., with two partners — Minn-Dak Farmers Cooperative of Wahpeton, N.D., and U.S. Sugar Corporation, a cooperative based in Clewiston, Fla.

Astrup said American Crystal usually contributes 65 percent of the sugar in that group, but this year the percentage will be less. United Sugar's may have about 20 percent less sugar to sell this year than originally was expected, he said.

Sidney Sugars farmers crossing fingers on frozen pile

SIDNEY, Mont. — Growers for Sidney Sugars Inc., a subsidiary of American Crystal Sugar Co., have at risk about 47,000 tons of "frozen addendum" beets.

The growers delivered 78,400 tons of frozen beets under an unusual agreement that may save the value of beets that were frozen in October and otherwise would have been stranded in the fields. That accounts for about 2,440 acres.

As of Oct. 21, Sidney Sugars had about eight days of frozen beet slicing before the company was to go back to regular pre-freeze beets. Processing is expected to run through the first week of March, which is normal.

This year's prepile harvest harvest was supposed to have started Sept. 20 but because of rain, full-scale harvest didn't start until Oct. 7. Then temperatures dipped to 20s on Oct. 9-15, including 22 degrees on Oct. 13. A knockout blow came Oct. 27-31, when lows lows dropped to 13, 12, 11, 10 and 19 degrees on successive days.

The company started harvesting frozen beets Oct. 27, but called the harvest off Nov. 5.

In the end, the farmers brought in 944,000 tons of beets. The company officially posted 32 tons of beets per acre and 17% sugar.

Of those, about total, 186,739 tons were delivered with freeze damage, or 20 percent. About 1,200 acres of this year's 30,000 acres were left in the field, unharvested.

Of the frozen beets, 108,000 tons were labeled "Sidney" beets, taken under standard contract. With the 78,400 tons in the "frozen addendum" agreement, farmers would deliver frozen beets and the company agreed to pile them and to try to process them only until they become too deteriorated to process economically.

If those beets cannot be sliced, the company will load the deteriorating beets back onto farmer trucks and the farmers will be responsible for taking them back to a field to discard. This is a new strategy.

"The farmer would be responsible to remove his percentage of the beets that are discarded," says Scott Buxbaum, a Fairview, Mont., farmer and president of the Montana Dakota Beet Growers Association.

"They did give us their word and they have stayed true to that, that they are going to try exceptionally hard," said Donald Steinbeisser Jr., a Sidney farmer and board member of the association. "A lot of people's profit is tied up in those frozen beet piles."

Steinbeisser said the last year of this kind of disaster was 1959.

Steinbeisser said all farmers he knew of kept trying to dig until the end. The choice of which fields to harvest first was sometimes affected by which ones carried more crop insurance coverage, he acknowledged. "If you have a 100-acre field and you dig 75 acres of it, you're not going to get crop insurance on 25 acres," he said, in a hypothetical example.

Minn-Dak leaves about 30 percent in field

WAHPETON, N.D. — Minn-Dak Farmers Cooperative of Wahpeton finished its harvest on Nov. 18, leaving 30 percent of its volume out in the field.

The company was hoping to have brought in 85% of beets, but the ag staff is in the process of GPS-verifying the unharvested acres, said Mike Metzger, Minn-Dak's vice president of agriculture.

"I feel we ran harvest as long as we could," Metzger said.

The company planted 101,500 acres and was projecting a yield of 25.5 tons to 26 tons per acre. The difficult harvest has made the final yield was difficult to determine. The sugar content was in the low 16 percent range, compared to a typical average of up to 17.1 percent.

Shareholders had severe infection conditions for much of the season cercospora leaf spot disease, when values on NDAWN locations.

"It didn't quit," Metzger said, of the unfavorable weather. "Late season rains and the high amount of cercospora pressure contributed to lower sugar content."

Metzger said the co-op "threw out the playbook we've had for 40 years" in handling beets in novel ways, in a number of different conditions.

"We took muddy beets," Metzger said. "We took warm beets and put on ventilation to cool them down, We took beets that were completely frozen. We took beets with excess mud." The company had to re-screen the beets to remove excess mud, bringing the beets down to "normal mud" before going into the factory."

"We allowed field stockpiling," Metzger said. "The bottom line is, we did everything we could to allow growers to deliver every acre they were able to."

The factory was working well, so far this fall, Metzger said, with a completion probably at the end of March to early April — six to seven weeks ahead of what had anticipated.

Beets harvested after Nov. 5 on the company went into short-term storage — essentially, beets that normally would be considered not fit to be stored.

About 100,000 tons were had severe "crown frost," meaning they could be stored with aeration.

Plus, they brought in 130,000 tons frozen solid that were segregated for "short-term" storage, with an uncertain shelf life, or about a month. Minn-Dak was halfway through processing those. "The factory is handling them okay," Metzger said. "It's 100,000 tons we wouldn't have gotten, period. So far they are holding remarkably well."

Infrared photography has indicated the pre-freeze beets appear to be storing very well.