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Published December 03, 2010, 10:10 AM

American Crystal has banner beet year

FARGO — American Crystal Sugar Co. shareholders at their annual meeting were happy but not giddy about a phenomenal crop and price year — their enthusiasm perhaps curbed by concerns about future use of Roundup Ready beets.

By: Mikkel Pates, Agweek

FARGO — American Crystal Sugar Co. shareholders at their annual meeting were happy but not giddy about a phenomenal crop and price year — their enthusiasm perhaps curbed by concerns about future use of Roundup Ready beets.

“Finally!” said Bill Hejl of Casselton, N.D., asked to come up with a single word to describe the year. He said the year will be notable for its high yields, high prices and — bonus — a trouble-free harvest.

Paul Mathiason of Grand Forks said farmers may find a way to “give away” those gains through higher land rent, and through paying higher input costs for next year, but he acknowledged that the year could hardly have gone down any better. “If you’re complaining this year, you should probably find something else to do,” he said.

Since November, shareholders have been told they’d likely be paid $57 a ton on the 26.3 ton per acre crop in 2010, a gross payment of $1,500 an acre that is a modern record. That could still be revised between now and when the final payment is made in November 2011. In the past few years, projections have been revised upward.

If that holds, the 2010 crop payment will be 25 percent higher than the respectable results from the 2009 crop, when $52.87 per ton of average was paid on a 22.7-ton per acre average — a $1,200 per acre average gross payment.

David Berg, Crystal’s president and chief executive officer, in his annual address, recounted how the co-op and its shareholders have become more efficient. The co-op harvested 11 million tons of sugar beets this fall, and will have a campaign that ran from mid-August to late May. “That was done on 415,000 acres this year. Thirty or forty year ago that would have taken 800,000 or 900,000 acres,” he said.

The company is always looking for new ways to squeeze more sugar from its current assets or “add some assets,” Berg said, but he wasn’t specific about what those investments might be. He said the industry currently is in good shape because of favorable demand.

Eyeing capital projects

Berg acknowledged that some growers are suggesting that now might be a time for greater capital investments. One path is increasing the “unit retain” levels to invest in more long-term capital projects. With unit retains, the company holds back a quantity of the payment for seven years, like an interest-free loan from the shareholders to the company. Unit retains have historically been $2 to $3 per ton.

“There’s always discussion” about shifts in unit retains, and Berg acknowledged that “in a year like this there’s obviously more.”

Uncertainty over Roundup Ready beet technology is the most prominent question for growers in 2011 and beyond.

Federal court actions Aug. 13 made it illegal to plant the glyphosate-tolerant beets, pending further action by the U.S. Department of Agriculture. Planting Roundup Ready beets in 2011 is in question, as well as in subsequent years, pending the outcome of an Environmental Impact Statement.

There also is new court action in California. A federal judge said some beet seed crop planted last summer in Oregon would have to be removed from the ground. Those Roundup Ready seed plants were planted after the judge vacated the deregulation of Roundup Ready sugar beets, even though they were planted under permits by the USDA. Plaintiffs in the lawsuit contended the permits should not have been given. One possibility is they’d be removed from the fields but kept alive as in carrot-like sized “stecklings” if the courts allow.

Berg noted the stecklings in the current dispute would come to maturity in 2011 and would be harvested for seed and planted for commercial production at the earliest in 2012, if allowed. Berg said American Crystal has a seed company and some of the acres in question were planted by a competitor. “I don’t know what our competitors are doing; it’s not legal for me to know that,” he said. “I don’t know what the volumes are and I can’t give you a real good idea about the impacts on seed.”

The issue of how to prepare for a non-Roundup beet year in 2011 continues to be negotiated between beet and chemical companies, as well as seed companies. The companies are negotiating volumes that may be needed, which could be affected by whether growers in other areas of the country decide to grow beets at all.

Scott Anderson, a Minnesota sales representative for Dow AgroSciences, with more beets in his territory than any other representative nationwide, said his company is one of three major companies that traditionally supplied components for “micro-rate” control herbicides in sugar beets, prior to Roundup Ready beets conversion.

Horse and buggy days?

Anderson likened the transition to “going back to horse-and-buggy” technology, considering the near-complete conversion to Roundup Ready in the past three years. He said Dow is relatively fortunate because their component in the micro-rate cocktail is Stinger, which is also used for other crops and in other markets in the United States.

Stinger is a “handy tool” for beet growers, he said, because it doesn’t “significantly add ‘burn’ to the crop” as some of the conventional beet herbicides did. “It allows us to use these materials at lower rate for better crop safety but weed control,” but it also required a high degree management, with applications timed to weeds that are much smaller than the Roundup control.

Further, he said Stinger has continued in use in some beet areas, such as southern Minnesota, where there have been some weed resistance problems with Roundup Ready beets. He said some 30 percent of the acres in southern Minnesota area are mixed with a “fairly stiff rate of Stinger” to produce a beet crop. Another 30 percent of the crop gets a low dose, and the rest none at all. Ragweed and lambsquarter weeds are the weeds Stinger helps on. In the Red River Valley, Stinger has been used for Roundup Ready soybean weed control.

“Any course of action we need to take to increase supply doesn’t have so much downside for Dow,” Anderson said. “We can repackage the chemical into things like roadside materials or pasture products, where others’ components for non-Roundup beats are very specific to sugar beets. If they don’t have a sugar beet crop to spray, they don’t have a market for their product. They’re too costly to reformulate and send overseas. To do full-spectrum weed control, we all need each other; that’s what’s interesting.”

Anderson said Dow and others will all have to make product decisions around mid-January.

Strange bedfellows

Several politicians and political analysts spoke at the annual meeting Thursday. A Republican-led U.S. House of Representatives is already been talking about cutting farm programs. Berg said the sugar industry is well positioned because it doesn’t’ cost “one cent” in the federal budget, but he acknowledged there will be pressure on budgets, and he’s “not so naive we can stand on the sidelines and watch a bunch of budget-cutting go on and not feel some pressure.”

Rep. Collin Peterson, D-Minn., who for another month will be Chairman of the House Agriculture Committee, had to cancel his speech because of a floor vote in Washington.

North Dakota Gov. John Hoeven, the Republican U.S. Senator-elect, praised the sugar industry and said he’d be a member of the Senate Appropriations Committee, and expects to be a member of the agricultural appropriations subcommittee.

Chuck Conner, president and chief executive officer of the National Council of Farmer Cooperatives, said budget cutting will be an issue for most of agriculture as the 2012 farm bill is passed. Conner, former acting U.S. Secretary of Agriculture and deputy secretary in the Bush administration — a sometime thorn for the sugar industry — is now working for co-ops of all kinds, including sugar. Conner didn’t refer to any of his earlier conflicts with sugar, but looked ahead on politics — noting that with Republicans gaining 63 seats in Congress, there will be gridlock. He said agriculture proponents will deal with the fact that half of the Democrats that we “worked closely with” were defeated, while historically 95 percent of incumbents tend to win.

Conner said cost-cutting will be a theme in Washington, outlets such as the Washington Post have declared agriculture “the reason” for budget problems, even though price supports account for only .25 percent of the federal budget. He quoted Sen. Tom Harkin, D-Iowa, as describing agriculture spending as “pencil dust” in the federal budget picture. Conner predicted sugar will be “viewed as being pretty smart” for insisting that its program be a no net cost to the government. He made no references to how — in previous farm bills — Conner was the one to cut sugar supports, despite the zero-cost provisions. There were no questions from the floor after his speech.

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