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"This program is happening pretty close to harvest. But it
may be attractive to some growers, especially if they have a high
freight bill." - Russ Fullmer
For the first time ever, the federal government is offering to
pay sugar beet producers to plow under a portion of their crop.
The program gives sugar beet and sugar cane farmers the option to
reduce their 2000 crop year production in exchange for CCC inventory
sugar. As harvest approaches, the valley's growers are considering
the merits of the government's offer.
The U.S. Department of Agriculture agreed Aug. 1 to create a
payment-in-kind or PIK program that would address the 18-year low
sugar price caused, in part, by a glut of sugar on the market. The
program would also stave off potential loan forfeitures that are
expected if sugar prices remain below the support price. The program
is being offered to growers throughout the country for both beet and
cane crops.
The USDA Farm Service Agency announced details of the sugar PIK
program in a press release Friday. According to the release, growers
have until Sept. 1 to sign up for the program, which limits PIK
payments to $20,000 per producer. That equals to about 10-15 acres
of beets. Growers interested in participating must bid for the
government-held surplus sugar and work directly with processors to
rework contracts and fill out program forms. Then the processors
will submit the bids and forms to the Commodity Credit Corporation,
a branch of the USDA that manages the government's sugar inventory.
Once the bids are sorted and approved, the FSA will issue
certificates for government-owned sugar to the growers, who, in
turn, will sell the certificates to the sugar processors. The
processors can then take ownership of the surplus sugar. According
to Bill Flanigan of the USDA in Bozeman, "The program will
hopefully reduce the amount of sugar in CCC inventory, the number of
sugar forfeitures and the overall storage costs." Flanigan said
that accepted bidders will be notified within a couple of weeks of
the Sept. 1 deadline.
"This certainly isn't the best timing," said Ag Manager
Russ Fullmer of Holly Sugar, whose staff will have to work with the
growers. "This program is happening pretty close to harvest.
But it may be attractive to some growers, especially if they have a
high freight bill." According to Flanigan, growers with
accepted bids will have to report the specific acres they plan to
"divert" or plow-down to their local FSA office. The FSA
will be responsible to spot check the growers to verify the reported
acres have been diverted. Growers may be able to allow grazing on
their diverted acreage, but the crop cannot be harvested in any
form, not even for feed. The diverted acreage is also required to be
in large contiguous sections. According to the USDA, eligible
growers must meet the following requirements:
Must share in the risk of producing the sugar on the acres bid.
Must be entitled to share in the marketing of the crop from the
acres bid.
Must have the authority to divert the acres bid from commercial
use.
Must submit their bid and sign-up forms by the Sept. 1
deadline.
Must have signatures of all persons who own shares in the crop
on program forms.
Producers who don't share in the risk of the acres bid are not
eligible to participate.
Producers are subject to assessed liquidated damages in an amount
equal to three times the value of the CCC inventory sugar approved
plus the refund value of the CCC inventory sugar if they are found
in violation of program guidelines. To help growers understand the
PIK program, the first of its kind in the sugar industry, the local
FSA office, along with representatives from Holly Sugar, held an
informational meeting at the Sidney Elks Club Tuesday at 7:30 p.m.
Highlights and details of that meeting were not available at press
time but will appear in Sunday's Herald.
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