The industry hit sour times after Texas-based Imperial Sugar Co. purchased the four Michigan Sugar plants in Carrollton Township, Caro, Sebewaing and Croswell, as well as its Saginaw Township offices, then filed Chapter 11 bankruptcy in January.

Farmers in the Great Lakes Sugar Beet Growers Association and Michigan Sugar officials rallied together to raise and process a 2001 crop without other investment dollars.

Now they are discussing forming a sugar cooperative, starting with the 2002 crop.

"This year, farmers were able to contract to raise beets but didn't have to pay the $200 co-op subscription fee," said Richard Leach Jr., executive vice president for the Saginaw Township-based Great Lakes Sugar Beet Growers Association, which represents 1,400 farmers.

"Next year, they will."

Leach said farmers fulfill the subscription contract, which amounts to buying shares in the company, by producing sugar beets. The shares are like shares in any other company.

"Farmers can keep them, sell them, pass them on in their wills, whatever they want," Leach said.

Monday's meeting will take place at the Michigan Sugar headquarters in Saginaw Township.

Imperial will sell Michigan Sugar to the cooperative for $55 million in cash, a $10 million deferred payment note to Imperial and a transfer of industrial development bonds or debt, he added.

The state has offered a $5 million interest-free loan for five years to help farmers come up with $22 million equity portion of the purchase.

That leaves the cooperative to raise $17 million for the down payment, with Michigan National Bank supplying the rest.

Leach said bank officials know that bad crop years occur, and the cooperative is funded accordingly.

"The banks don't want us to come back for more money if the first year is a bad year, nor do we want to do that, so we're adequately financed to carry it through the peaks and valleys."

The value of the industrial development bonds, which is a debt the company assumed and is transferred at the time of closing, is not yet determined.

"The debt is $18.5 million at face value, but it's in negotiations with the bankruptcy court," Leach said. "The impaired value after the bankruptcy may be half that, because (Imperial) doesn't have the backing it once had."

"If we're going to make this work, the key message is volume," Leach said. "Our industry has a fixed cost in production; the rest is profits. We can process 4 million bags of sugar for the same price it takes to process 6 million.

"If we don't harvest the acres, this won't work."

Although Leach said the parties have asked him not to disclose how many acres already are signed up for 2002, he added the figure is "well over 75 percent" of the goal and that both sides are confident they will reach it.

Michigan Sugar contracts for sugar beets from farmers in 11 counties - Saginaw, Bay, Gratiot, Huron, Lapeer, Midland, Monroe, Montcalm, Sanilac, St. Clair and Tuscola. t

Dean Bohn is a staff writer for The Saginaw News. You may reach him at 776-9679.