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TWIN FALLS, Idaho -- It's a dubious distinction at best, but
Amalgamated Sugar Co. July 31 became the first sugar processor of
note in more than 15 years to forfeit on its government loan, thus
handing over a small mountain of sugar -- about 42,000 tons -- to
the government.
It is also the first time in the company's history that it has
forfeited on a government loan, says Amalgamated President Larry
Corry, quick to point out that a forfeiture is not a default.
Repayment of the loan in sugar rather than cash is considered
payment in full on the company's nonrecourse loan with the Commodity
Credit Corp., he says.
"Actually, it's a better sale than the sale on the spot
market," Corry says.
'Worst prices' Market prices on refined sugar are running $19-$20
per 100 pounds, while the CCC loan rate, determined by law, is just
more than $22 a hundredweight.
"Prices for sugar are the worst prices we've seen in over 20
years," Corry says. "They are 25 (percent) to 30 percent
down from last year."
The bottom line in a complicated array of detrimental trade
agreements and attacks on the sugar industry's health is that
domestic production is up, imports are up and consumption is down,
he says.
The grower-owned company, based in Ogden, Utah, has local plants
in Twin Falls and Paul, Idaho. It is the first company to forfeit on
its loan, primarily because it was the first loan to come due in the
present market situation. But it likely won't be the last.
Other sugar companies and some cane growers have filed notices of
intent to do the same.
Lonn Thaete, a Filer, Idaho, sugar beet grower and secretary of the
Idaho Sugarbeet Growers Association, says the forfeiture comes as no
surprise.
"We knew it was coming for quite a while," he says,
adding that growers are more concerned with the market situation
than they are with forfeiting their sugar. "We can make more
money forfeiting it than selling it. And if we can make more on it,
we don't have a problem with the company trying it."
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