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By Mikkel
Pates
Agweek Staff Writer
FARGO, N.D. -- A third of the region's sugar beet
farmers may be ineligible for the payment-in-kind program because they
expanded acres since last year.
The U.S. Department of Agriculture currently plans to
enforce a rule that prevents participation by growers who have expanded
their personal acreages in the past year. The PIK program is designed to
revive sugar markets by destroying healthy beets. Signup was announced to
start Sept. 10, Nelson says.
Program
discussion
Gary Nelson, FSA state director for North Dakota, and
key staffers were huddling with American Crystal Sugar Co. and Minn-Dak
Farmers Cooperative in the Fargo, N.D., area Sept. 6, discussing how the
program will work.
David Berg, vice president for agriculture at
American Crystal Sugar Co. in Moorhead, Minn., says all beet companies in
the nation are fighting the enrollment limitation rule.
"The provision in last year's PIK enrollment
contract says that if an individual producer increased acres beyond what
was planted in 2000, that that producer may -- may -- not be eligible to
participate in a future PIK program," Berg says.
"We were guided, very clearly by USDA at that
time that that provision would not be enforced on individual producers
this year because USDA's intention was to limit speculative acreage
increases companies that might exploit the program."
Participation
Total U.S. beet plantings are down 12 percent, Berg
says. American Crystal's acreage is down marginally from last year. But
while the industry scaled back, some growers did add acres over 2000
levels. About one third of Crystal's growers are in that position, he
says.
"We and all other beet processors have protested
very strongly to USDA -- that these individuals should not be penalized
when American Crystal fulfilled the intent of the program," he says.
Berg says USDA should use its discretion to allow
individuals to fully participate despite their individual expansion.
Nelson of the FSA says he hopes the agency has all the information it
needs by Sept. 11.
"We may, if it gets delayed, be notifying the
companies who will notify producers to wait until (Sept. 11 or 12) before
they start coming in," Nelson says.
Berg says FSA offices on both sides of the border are
planning to start making appointments Sept. 10 with farmers to come in
later in the week.
Change made
Unlike last year, this year's PIK program will skip
the step of signing up at co-op offices and will instead be located in
local FSA offices. Crystal and Minn-Dak will provide some staff as
volunteers at the government offices to handle their part of the signup.
That involves helping pick which entities on farms should be enrolled and
to make appropriate amendments for Crystal agreements.
Luther Markwart, executive vice president of the
American Sugarbeet Growers Association in Washington, says the change was
made because having the processor between the grower and the FSA caused
some "confusion" in 2000.
"The fact that this thing is so late this year,
they figured to avoid that confusion and go directly to the (FSA) office
they'd make sure they don't run into those problems again."
USDA annoucned the program Aug. 31. The rogram will
involve both beets and cane but will limit the program to 200,000 tons of
sugar. Last year's similar "PIK" program did not include limits
and took about 277,000 tons of sugar out of production. About a third of
that, accounting for about 30,000 acres, came from Crystal.
"We would have preferred no limits, but overall
this is very good news," says Kevin Price, Crystal's director of
governmental affairs in Moorhead.
Mark Weber, executive vice president of the Red River
Valley Sugarbeet Growers Association, praises the announcement.
"With this announcement, it's hopeful now we'll
see stronger prices to avoid forfeitures that were probably in the
making," Weber says.
Inventory
reduction
The PIK program will help shrink the pile of 741,148
tons of sugar held in inventory by USDA's Commodity Credit Corp. The move
also will reduce the inventory costs to the government. The CCC is
incurring $1.35 million in expenses on 446,594 tons of refined sugar and
294,554 tons of raw cane sugar.
As was true last year, individual farmers will be
limited to a maximum of $20,000 value in sugar. Signup will end Sept. 21.
Individual farmers should contact USDA Service Center or Farm Service
Agency county offices between those dates to obtain information. They'll
report specific acres to be diverted and complete forms.
According to the USDA release, the amount of sugar in
dollars-per-acre that the producer will generate will be computed for each
producer. Each will specify the amount of sugar the producer will take to
divert the acres.
"Bids will be ranked on the percentage that the
second amount is of the first" amount, the release says. "The
bids will be ranked so as to ensure that the 200,000-ton goal is not
exceeded."
By Sept. 28, the department will announce which bids
are accepted, based on the ranking percentage, and subject to other
"eligibility criteria" not available until after Sept. 10. The
PIK concept is authorized under the cost reduction options written into
the 1985 farm bill.
"USDA's objective is to move this program toward
a more market-oriented system that would reduce government involvement in
the storage of sugar," the department says in the release.
"Large publicly-held sugar stocks have a distorting impact on the
market and the sweetener industry as a whole."
Information on the program and bid process will be
available on the FSA Web site, www.fsa.gov, before Sept. 10.
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