| Nov. 4, 2000 - Nearing the end of another disappointing
harvest, Rocky Mountain sugar beet growers have inched closer to improving
their fortunes by buying a series of sugar factories.
The Rocky Mountain Sugar Growers Cooperative recently signed a letter
of intent to pay $78 million for six sugar processing plants in Colorado,
Nebraska, Wyoming and Montana.
Beet growers said that with prices depressed again this year, they hope
that controlling their own sugar factories will help them operate
profitably in a farm sector that currently generates few, if any, profits.
"This is a pretty bad time for us," said Frank Eckhardt, a La
Salle beet farmer and treasurer of the Colorado Sugarbeet Growers
Association. "Prices are down, and we're looking for some way to help
ourselves." The proposed deal calls for the cooperative to purchase
six Western Sugar Co. plants from Tate & Lyle North America Sugars,
which is seeking to unload all of its beet-processing assets.
However, the transaction is contingent on the co-op obtaining financing
for the purchase, as well as getting commitments from enough beet farmers
to keep the plants operating near capacity.
The co-op includes about 1,200 sugar beet growers in Colorado,
Nebraska, Wyoming and Montana. Colorado's 550 beet farmers produced 1.5
million tons last year, making the state the seventh-largest beet producer
in the nation.
The deal to buy Western Sugar calls for the cooperative to find bank
loans for twothirds of the purchase price, or about $52 million, with
individual grower-members paying the remaining one-third, or about $26
million, based on payments of about $180 per acre of beets grown.
Randon Wilson, an attorney for the growers' group, said he's
"encouraged" by the response from potential lenders, which
include Dutch lender Rabo Bank, plus American financiers GE Capital, Wells
Fargo and U.S. Bank.
The cooperative also would seek an additional $50 million from lenders
for operating capital.
Meanwhile, the Colorado sugar beet harvest is winding down this week
with plenty of beets but not as much sugar concentration as growers would
like.
"Our tonnage is right on par," said Joe Amen, president of
the Colorado Sugar Beet Growers. "The problem is the sugar
content."
Amen said this crop marks the fourth or fifth consecutive year in which
the beets' sugar percentage has been lower than average, and farmers are
at a loss to explain why.
The growers have eradicated a leaf blight that they thought might have
caused problems, and this year's cool fall nights should have been good
for sugar production.
But the average sugar percentage in beets this year is about 15
percent, compared with percentages reaching as high as 18 percent in
better years.
The sugar-content loss has a direct economic consequence to growers.
Amen said current prices of about $29 a ton are at least $4.50 a ton lower
than the price for an average sugar content of 16.5 percent. The result is
that growers are receiving about $90 less per acre of beet production.
"It's been a struggle," Amen said. "We're hoping for
some better times." |