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The Red River
Valley’s two sugar processing cooperatives likely will forfeit on
government loans despite taking part in a program designed to avoid the
forfeitures.
American Crystal Sugar Co. in Moorhead and Wahpeton-based Minn-Dak Farmers
Cooperative are participating in a government program that will pay sugar
beet and cane growers to destroy some of this year’s crop.
The 2000 Payment-In-Kind Program is intended to stimulate an increase in
the domestic sugar price and alleviate the threat of processors forfeiting
on government loans in which sugar was used as collateral.
The PIK program also was designed to help reduce the nation’s sugar
glut.
The U.S. Agriculture Department accepted bids Friday from American Crystal
growers to destroy about 27,300 acres of sugar beets, said David Berg, the
cooperative’s vice president of administration.
Minn-Dak Cooperative members were awarded contracts that require them to
destroy about 8,100 acres, said Patricia Keough-Wilson, the
cooperative’s communications director.
Both cooperatives are working with USDA officials on other bids that have
not yet been awarded or rejected.
Nationwide, the government is expected to eliminate 105,000 acres of sugar
production through the PIK program.
But the Red River Valley’s two sugar processors say they likely will
forfeit on loans due Sept. 30, despite taking part in the program.
The program hasn’t been in place long enough to impact the price of
refined sugar before the loans will come due, Berg said.
“I think the die has been cast for forfeitures at the end of this
month,” Berg said.
American Crystal has about 201,000 tons of sugar on loan and Minn-Dak
received federal loans on 18,000 tons, company officials said.
Officials at both companies would not release the value of their loans due
Sept. 30.
Processors of refined sugar need a national average price of about 25
cents per pound to discourage loan forfeitures, said Mark Weber, executive
director of the Red River Sugarbeet Growers Association.
The national average price for refined sugar is currently about 19 cents
per pound, Weber said. |