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"I can understand why the government is offering the PIK
program. They've got to do something with all of that sugar."
- Don Steinbeisser
Area sugarbeet growers must decide by Friday Beet growers have
less than a week to participate in the first ever sugar PIK
(payment-in-kind) program offered by the U.S. Department of
Agriculture. The program gives sugar producers the option of
destroying a portion of their beet crop in exchange for
government-owned sugar.
Sugarbeet growers throughout the valley have been meeting with
agriculturists from Holly Sugar to determine if the new PIK program
can offer some benefits. Bids and forms must be submitted by Friday
to be eligible.
More than 200 growers met at the Elks Club Tuesday to find out
more about the sugar PIK program. Representatives from Holly Sugar,
the local office of the Farm Service Agency (FSA) and the growers
association were on hand to answer questions.
"Each farmer has got to take a hard look at the
program," said Russ Fullmer of Holly Sugar. "You need to
have a pretty clear idea of what you want to do when you come in for
your appointment," he told the growers.
Fullmer, Holly's ag manager, reminded the growers to consider
their three-year average yield, sugar content and recovery rate.
Those factors are the most important in deciding if the PIK program,
which offers a payment of $20,000, is a good alternative.
The USDA announced plans Aug. 1 to establish a PIK program for
sugar producers. Details of the program were released last week.
Montana Dakota Beet Growers Association President Don Steinbeisser
told members that the USDA put the PIK program together in record
time. "I've never seen the USDA move so quickly on
something," he said. "These programs usually take as long
as six months to put together." The federal government, which
owns more than 170,000 tons of surplus sugar, hopes the PIK program
will help boost the sugar price, which is at an 18-year low. More
importantly, a higher sugar price could head-off looming loan
forfeitures. The USDA will also have to pay storage for its sugar
beginning Sept. 1. Much of that surplus sugar rests in Holly Sugar
silos.
"I can understand why the government is offering the PIK
program. They've got to do something with all of that sugar,"
said Steinbeisser. "I sat through several telephone conferences
on this issue. It looks like they got a lot of industry input."
Steinbeisser thinks the program may be very attractive in other
areas of the country such as the Red River Valley where the
cooperatives are encouraging participation. As much as 10 percent of
the total acreage planted to sugarbeets could be destroyed.
"They have some pretty poor beet fields out there because of
flooding," Steinbeisser said. "They also have longer
campaigns than we do in this area." Steinbeisser pointed out
one obvious benefit of the PIK program, the option to destroy what
are likely to be the least productive fields. "This close to
harvest, most growers have a good idea of their worst acreage, and
growers have the right to chose the acreage they want to
destroy," he said.
Lloyd Keller, the county executive director of the local Farm
Service Agency office, warned the growers to play by the rules if
they plan to participate. "This PIK program carries some very
stiff penalties if you don't do what you say you're going to
do," Keller said. "They could break you." Producers
who are awarded bids in the PIK program pledge to destroy the acres
they bid and cannot use them for any purpose other than grazing.
According to Keller, growers that violate the terms and conditions
of the program would have to pay a full refund of the value of the
sugar certificates issued to them, plus three times the value in
liquidated damages.
Many of the growers that attended the Tuesday informational
meeting had questions concerning eligibility, especially when
considering leases, crop-share arrangements, and power-of-attorney
rights. Fullmer advised them to consult the FSA to see how exactly
their growing operation is defined. The FSA designations must match
the contractual agreements with Holly Sugar. "It all comes down
to identity numbers," he said.
Fullmer told the growers that Holly Sugar is neither encouraging
nor discouraging participation in the PIK program. Each grower will
have to weigh the merits of the program and make an individual
decision.
"Personally, I'm not a big fan of this program. I have my
doubts it will accomplish what it wants to do," Fullmer said.
"But as long as the government is offering it, you may be able
to take advantage of it." Steinbeisser also has his doubts. He
said sugarbeet growers have always taken pride in never relying on
government programs or costing taxpayers a lot of money. "I
hope this PIK program is a one-shot deal. I would hate to see us
taking a look at it again next year."
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