09-13-01: PIK program could be too late

PAUL -- While Idaho's Congressional delegation responded favorably to USDA's announcement of a Payment-In-Kind program for sugar beet producers, for most Magic Valley growers, the news came far too late. The program, designed to reduce current government stocks of sugar, which are hanging over the market and depressing prices, came too late in the game for growers such as Dan Schaeffer of Paul. "Most farmers have at least 85 percent of production costs into it already," Schaeffer said. "To make PIK work good it should be initiated first thing." Planting, irrigating, fertilizing and other growing costs make it impractical in most cases to participate this late, he said. "To get it I will have to bid lower than what it cost me to produce it," he said. "That's not financially smart." But the program is not something he will rule out entirely. "It will be an option I can use," Schaeffer said. Even though PIK came too late in the game for most Magic Valley farmers the program is still valuable in one way. "I am pleased the USDA has at last announced a PIK program to assist the recovery of our domestic sugar markets," Senator Larry Craig said. "Our growers are desperately in need of this support, and I hope this program will allow our sugar inventories to balance supply and demand so that our growers can receive a fair price for their products." The PIK announcement, along with last week's favorable court ruling on stuffed molasses, is a turning point for the sugar industry, he said. Senator Mike Crapo agreed. "This announcement is welcome news," he said. "Low sugar prices have been compounded by government supplies. This program will reduce the government inventory of sugar, assuring our sugar beet producers remain viable." Wayne Hammon, state executive director of the Farm Service Agency, worked this week to hammer out details of the program, which includes a sign-up period for submitting bids from Sept. 10 to Sept. 21. "The PIK program offers eligible sugar beet producers the choice of diverting from production a portion of their 2001 crop in exchange for sugar held by the government," Hammon said. "Farmers can bid for this sugar in government inventory by offering to divert acres from harvest." The total diversion program will be limited to a maximum payment-in-kind of 200,000 tons of government-held sugar, and individual farmers will be limited to a maximum $20,000 value in sugar, he said. Individual producers should contact their local FSA county office during sign-up dates to obtain information, report the specific acres that will be diverted, and to complete program forms. The amount of sugar in dollars per acre that the producer could generate will be computed for each producer, and each producer will specify in dollars the amount of sugar the producer will take to divert the acres, according to USDA officials. Bids will be ranked on the percentage that the second amount is of the first. The bids will be ranked so as to ensure that the 200,000-ton goal is not exceeded. Farmers have to make a decision if they want to use PIK, said Leonard Kerbs, ag manager of the Twin Falls Amalgamated Sugar Co. factory. "They have to see what they would get per acre compared to what they would PIK," he said. But for most it might be too late. "Harvest starts Monday," he said.

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