| GRAND FORKS, N.D. (AP) -- American Crystal Sugar Co. stock
has been taking a hit.
Crystal' s 2, 800 shareholders have lost an estimated $600 to $900 a
share over the past two years. Shares that 18 months ago were trading at
$1, 500 to $1, 800 now are in the $900 range and, conservatively, $300
million to $450 million has been washed away from the co-op balance sheet.
Crystal stock is owned by its growers.
Co-op officials are telling their growers not to panic, and are urging
a stronger U.S. sugar program and curbs on Mexican sugar coming into this
country.
Faced with 20-year sugar price lows, Moorhead, Minn.-based Crystal
recently announced a $31.50 per ton gross payment for this year' s beets.
The average break-even price for growers is estimated at $30 per ton. They
were paid $37.31 per ton for 1999 beets.
Bob Bahl, president of Farm Credit Services of Grand Forks, which lends
to farmers in 20 northern Red River Valley counties in North Dakota and
Minnesota, said the impact of the cuts in payments and stock values will
be the greatest on farmers who can afford it least.
" Anybody' s who' s higher-leveraged, has less owner equity or
doesn' t have a large enough base to operate from, is going to feel more
impact, " Bahl said. " You' re going to see more of those people
exiting the business."
On the bright side, cold weather early in the season should make for
favorable storage conditions, which might help the payment. And Crystal
and its sister cooperatives, Minn-Dak Farmers Cooperative of Wahpeton and
the Southern Minnesota Beet Sugar Cooperative of Renville, Minn., are
continuing to produce at full bore.
A few American Crystal growers have been asking for a reduction of
acreage, from nearly 500, 000 acres to the 450, 000-acre level, to get
production in line with markets. Crystal this year wound up with 455, 000
acres, one of its largest crops in history.
Crystal officials say they would consider some sort of industrywide
reduction, including cane producers.
The shareholder equity losses at American Crystal do not appear to be
turning into a significant cry for new management.
Most members seem to accept that problems such as excess sugar from
Mexico and unfavorable court decisions on Canadian " stuffed
molasses" deals have been out of management control.
James Horvath, Crystal president and chief executive officer, helped
strike the deal to lease the $260 million ProGold corn processing plant in
Wahpeton to Cargill when the company started seeing years of red ink in
its future.
Free from its ProGold losses, Crystal in August 1997 approved the sale
of 61, 500 shares of preferred stock, raising $92 million for capital
projects that have come during a market glut and low prices.
" I think Horvath has taken over in a difficult situation, "
says Paul Borgen, a grower and former board member from Georgetown, Minn.
" Anything that could go wrong has gone wrong in the last three
years." |