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The Red River Valley's sugar beet producers will begin submitting
bids Wednesday to take part in a federal program that will pay them
to destroy some of this year's crop.
The Red River Valley's two sugar processing cooperatives -
American Crystal Sugar based in Moorhead and Minn-Dak Farmers in
Wahpeton - are encouraging their producers to submit bids for the
2000 Sugar Payment-In-Kind Program.
And officials with both cooperatives said they expect heavy
participation among their shareholders.
American Crystal's 2,500 shareholders planted about 500,000 acres
of sugar beets this year. Through the payment-in-kind program, they
could destroy between 40,000 acres and 50,000 acres of the crop,
said James Horvath, the cooperative's president and chief executive
officer.
Members of Minn-Dak Farmers Cooperative planted about 102,000
acres this year and could plow up as much as 10,000 acres under the
program, said Patricia Keough-Wilson, the cooperative's director of
communications.
The U.S. Department of Agriculture announced Aug. 1 that it would
initiate the program to pay growers for their production and yet
reduce an oversupply of sugar that has sent the sweetener's price
spiraling to an 18-year low.
The government hopes the program will stimulate enough of an
increase in the domestic sugar price to alleviate the threat of
processors forfeiting on government loans in which sugar was used as
collateral.
The program's success is largely dependent on the nationwide
participation of sugar cane and beet growers, Horvath said.
Jim Baker, who grows about 520 acres of sugar beets near Sabin,
Minn., said he will submit a bid for the maximum program payoff -
$20,000.
Baker said he grows about 200 acres of sugar beets as a
shareholder of American Crystal and another 320 acres as a member of
Minn-Dak Farmers Cooperative.
"Some people would think that's a windfall, but when you
consider a 500-acre crop includes $300,000 in production costs - it
puts things in perspective a little bit," Baker said.
On average, producers in the Red River Valley will pledge to
destroy about 25 acres of sugar beets if they want to collect the
full payment, Horvath said.
Under of the program, the Agriculture Department will issue sugar
beet and cane farmers certificates for government-owned sugar in
exchange for the crop they plow under.
In the Red River Valley, the cooperatives will pay their farmer
members cash for the receipts. The cooperatives will then turn the
certificates into the government and take ownership of
government-owned sugar.
The government owns 174,000 tons of surplus sugar and is expected
to take as much out of production through a competitive bidding
process.
The local cooperatives will meet with their members beginning
Wednesday to help them calculate bid caps for the payment-in-kind
program.
They held meetings throughout the Red River Valley last week to
brief their members on the program's details.
Horvath said American Crystal representatives also are meeting
with USDA officials to come to an understanding about some of the
program's rule language.
American Crystal representatives are seeking a clearer definition
of what constitutes "per-person" payment limitations, he
said.
The USDA will accept producers' bids until Sept. 1.
Baker and Horvath said they believe the payment-in-kind program
offers a short-term solution to producers' sugar price woes.
"I view it as one piece of a big puzzle," Horvath said.
Poor trade agreements rising imports and rising domestic
production are driving down sugar prices, industry officials say.
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