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MOORHEAD -- Sugar beet payments are poor now, but American
Crystal Sugar Co. officials warn they'll go lower for 2000 beets,
unless the government solves an oversupply problem.
James Horvath, Crystal's president and chief executive officer,
told growers in factory district meetings last week that -- unless
prices improve -- they can expect beet payments in the $28 to $32
per ton range.
That compares with an already lackluster $35.45 per ton paid on
1999 beets.
The $5-per-ton payment cut would amount to about a $50 million
pay cut for sugar beet growers.
Horvath acknowledged that some growers were "shocked at
that kind of drop" and some said they couldn't continue with
the crop.
Hard to break even The co-op was paying in the
$40-per-ton range just a few years ago. North Dakota State
University economists have calculated the break-even price for
beets at about $30 per ton, assuming a healthy, 20-ton-per-acre
yield.
Horvath said Crystal officials have held meetings in the Fargo
and Grand Forks areas in the past three weeks to explain the
situation to city mayors and city councils.
"They were certainly surprised," Horvath said.
For 1999 beets, the negative impact of low sugar prices was in
the range of $2 per ton, Horvath said. That was offset by better
sugar recovery for the beets. Roughly three-fourths of last year's
sugar was sold before the most serious price declines, Horvath
said.
The price cuts will be more serious in year 2000 beets, even
though some of the company's sugar is sold under long-term
contracts.
Price free fall Raw sugar prices started falling last
September and October, dropping from about 22 cents a pound to 17
cents. A similar decline carried through to the refined sugar
market.
Horvath blames the surplus crisis on Canadian imports of
sugar-stuffed molasses, Mexican sugar imports and World Trade
Organization minimum imports. Together, they account for 1.75
million tons of a 10-million-ton U.S. market, he said.
"I kind of conjectured that we could solve (the surplus)
tomorrow, or it could be three to four years," Horvath said,
describing the solution as "primarily political."
Sugar processors in the Red River Valley and elsewhere have had
to expand to "offset inflation," because the price of
sugar has stayed the same for 15 years, Horvath said. Farmers also
have shifted into beets because returns for other crops are so
dismal. |