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Colorado sugar-beet growers and other cash-strapped Western beet
farmers are banding together in an attempt to buy regional processor
Western Sugar Co.
The sugar-beet producers, struggling to survive under a 20-year
low in sugar prices, have formed a cooperative that might give them
the financial leverage needed to buy Western Sugar.
The Rocky Mountain Sugar Growers Cooperative last week sent out
letters to beet farmers in Colorado, Nebraska, Wyoming and Montana,
asking them to help fund a feasibility study for purchasing the
processor.
Beet growers say that acquiring Western Sugar might help them
operate profitably in an agricultural sector that currently
generates few, if any, profits.
About 1,200 beet producers in the four states are under contract
to supply about 3.5 million tons of sugar beets to Western Sugar.
The processing company converts the beets to refined sugar at six
regional factories, including Colorado plants in Greeley and Fort
Morgan.
"The sugar dollar has shrunk so much that it's hard for
producers and processors to both survive," said Frank Eckhardt,
a La Salle beet farmer and treasurer of the Colorado Sugarbeet
Growers Association.
"It would be better to have everything in one pocket,"
he said. "I don't know if it would be a big advantage to
growers, but it might put us on the profit side instead of just
breaking even." Colorado is the nation's seventhlargest
sugar-beet producer, with 550 beet farmers growing 1.5 million tons
last year.
Beet production has increased steadily over the past decade, but
prices have fallen in conjunction with the larger supply.
In Colorado, farmers have seen beet prices drop 19 percent from a
peak of $43.70 a ton in 1988, according to the Colorado Department
of Agriculture.
Western Sugar and its corporate parent, London-based Tate &
Lyle Plc, are willing to entertain offers from the growers
cooperative or any other buyer, said Gary Price, director of
operations for Western Sugar.
"We don't have a for-sale sign on our front yard, but we'd
probably look at a reasonable offer," Price said.
He said Western Sugar has talked with two other prospective
buyers, which he declined to name. Speculation in beet-farming
circles identifies the bidders as agriculture giants Cargill and
ConAgra.
Price said that in theory, a growers' co-op might be able to
offer a higher price for the processing assets than a corporate
buyer, because the co-op would not be under pressure to produce
profits for public shareholders.
On the other hand, he said, farmers might have trouble financing
a purchase because of current low prices for sugar.
Eckhardt of the Colorado Sugarbeet Growers Association said
members are being asked to pay $2 per acre to fund the feasibility
study for the Western Sugar purchase.
If the deal appears feasible, he said the cost to farmers of
buying the processing plants might start at $200 per acre and could
be higher.
The typical Colorado sugar-beet farm ranges from 250 acres to 800
acres.
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