| POWELL, Wyo. (AP) – The proposed Western Sugar buyout may
be the best opportunity growers will have to perpetuate the sugar beet
industry in the Big Horn Basin, an analyst said. But the buyout is also
fraught with risk, said Paul Burgener, University of Nebraska research
analyst.
Burgener, who grew up on a Powell beet farm, said the buyout will
succeed only if the profit level is high enough to service its debt.
For a buyout to have any chance, growers will have to see a lot of
support from bankers, communities and landlords, he said.
Local banks will be heavily involved in any financing arrangements,
Burgener said. But he said he also expects a federal agency called the
Bank of Cooperatives to be involved.
Landlords who expect sugar beets to be raised on their ground will have
to buy into the program to make it work, he said.
In other communities where grower buyouts have occurred, Burgener said
farm-related businesses have also helped by buying shares.
Burgener said for the buyout to work, it will have to pay its own way
and not be a drain on farm income.
“If the producer is in a good debt-to-asset position, he will be able
to acquire financing for this. On the other hand, if the grower is in
trouble, this will be difficult to make work,” he said.
Some operations will not be loaned the money necessary to finance the
buyout, he predicts.
Burgener said a feasibility study expected in a couple of weeks will
help growers and the buyout team assembled by Salt Lake City attorney
Randon Wilson assess whether it can be managed.
But the fact remains that with so many sugar variables undecided, it’s
difficult to foresee the future, Burgener said.
“This is my biggest concern,” he said. “We’re doing very little
to reduce production of sugar in the U.S. and the present low prices are a
direct result of overproduction.”
Burgener said growers will have to pay close attention to the actual
cost of producing an acre of sugar beets.
The Big Horn Basin region has actually been losing money to the tune of
$32 per acre over the past 10 years, he said.
The basin is not as bad as some growing regions, he said, but Montana
is the only sugar beet region in the West with a positive net return on
beet acreage over the past 10 years.
The overall long-term sustainability of the sugar beet industry in the
Big Horn Basin will be contingent on the sugar policy, he said.
Ric Rodriguez, of Heart Mountain, a member of the Rocky Mountain Sugar
Growers Cooperative board, said he remains optimistic that a deal may be
worked out in which growers purchase Western Sugar’s six factories,
including the one in Lovell.
But growers have to do what they can to keep the sugar beet industry
alive in the Big Horn Basin, Rodriguez said.
“I know what no beets does to my operation,” he says. “I know
what no beets does to the valley.”
The Rocky Mountain Growers Cooperative was formed to explore the
possibility of purchasing Western Sugar. The cooperative consists of
Western Sugar growers and their landlords in Nebraska, Wyoming, Colorado
and Montana.
Tate & Lyle PLC, the parent company of Western Sugar, is in
negotiations with two other parties about the sale of the company’s six
sugar factories.
Updated: Friday, September 22, 2000 Copyright © The Billings Gazette,
a division of Lee Enterprises.
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