| One cannot live in Montana long without getting nicked by
barbed wire.
It is everywhere and almost every trip into the outdoors provides an
encounter. Of course, there are numerous methods of crossing such a fence.
It goes best if one has a partner to spread the wires as you move through
the middle. When alone, straddling the top wire is usually the method of
choice.
Thats when most of us get into trouble. That top strand is higher
than it looks and it results in getting hooked in the loin.
Right now, sugar beet farmers that produce for The Western Sugar Co.
are contemplating the cross-over to owning the company and there are lots
of barbs to get hung up on.
The sugar industry has been in south central Montana for about a
century. Like all industries, it has had its ups and downs, but, for the
most part, has been a reliable cash crop for irrigated farms.
Right now the sugar industry, domestic and foreign, is in the tank.
There is too much sugar.
So much that the market price for sugar in the United States has fallen
below the federal governments loan price, resulting in mountains of
sugar forfeited into U.S. Department of Agriculture warehouses.
This past week, Imperial Sugar Co., with its Holly Sugar Corp.
factories in Montana and Wyoming, sought Chapter 11 bankruptcy protection
while it reorganizes.
Western Sugar, with plants in Billings and Lovell, Wyo., and four
others in Colorado and Nebraska, is up for sale by its parent firm, Tate
& Lyle PLC of London, the largest sweetener company in the world.
During 2000, the companys financial and stock status deteriorated
sharply and the company began selling off properties around the globe. In
mid-year, T & L decided to divest its U.S. properties including The
Western Sugar Co.
The British firm has offered Western Sugar to its growers, who have
formed a co-op. The asking price is $78 million or less than half of the
companys liquidation value. Tate & Lyle really does want out of the
U.S. market.
The question is, do farmers really want to own the company?
Here are a few questions (barbs if you will) that Westerns 1,100
producers are confronting these days.
Is there a future for beet producers?
If we buy the company, can I afford the added debt?
Can I afford to stop growing a crop that has provided such a good
return compared to other crops?
What do I do with all this specialized equipment that is only used in
growing beets?
Do I do what is good for the community or whats good for me? The
Billings sugar factory injects more than $50 million a year in direct
economic impacts.
And what about NAFTA and WTO and Mexican imports and Canadian companies
laundering sugar through molasses imports?
The questions are seemingly endless.
But there is one really big unknown that gives a farmer pause, maybe
even a nightmare.
What is Congress going to do?
Heretofore the sugar program has not cost the taxpayers any money. But
the current situation cost the U.S. treasury more than $600 million in
2000.
There have been annual attacks in Congress to abolish the sugar support
structure, its opponents arguing that it costs consumers $1 billion in
higher prices for sweetened products. The effort is always beaten back.
In the 1996 Farm Bill, sugar producers were left virtually untouched
compared to other commodity groups. But you can bet your beet topper that
wont happen again in 2002, when the new farm legislation is to be
written and passed.
All this leaves the Western Sugar grower in a quandary that has to be
resolved soon. Do I buy in or get out of the business?
And how many barbs am I going to get ripped by as a result of my
decision? |