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Published December 06, 2012, 05:27 PM

American Crystal talks crops at annual meeting

American Crystal Sugar Co.’s annual meeting was marked by another big crop and a historic, ongoing dispute with its labor union.

By: Mikkel Pates, Agweek

FARGO, N.D. — American Crystal Sugar Co.’s annual meeting was marked by another big crop and a historic, ongoing dispute with its labor union.

The 2012 crop posted record-high yields of 27 tons per acre and record-high sugar content at 19 percent. The company is processing an 11.4-million-ton crop. The company projects a record-high initial beet payment at $65 per average ton. That figure could be revised in March and August of next year.

Behind the prosperity, the company entered a second holiday season in a bitter dispute with locked-out workers in its Bakery, Confectionery, Tobacco Workers and Grain Millers AFL-CIO union. The union has rejected the company’s contract in four separates votes, including the latest on Dec. 1, when 55 percent voted it down. The dispute is about union rules and control in promotions, among other things.

The union officials held a press conference at the hotel as the Crystal meeting started. They emphasized immorality of the lockout and how it violated the co-op spirit. Two Moorhead (Minn.) City Council members said they thought the company should come back to the table. The union theatrically tried in vain to hand-deliver what they described as a petition with 100,000 signatures, asking for more negotiations and concessions by the company.

John Riskey, a local president of the BCTWGM for factories in East Grand Forks, Minn., Moorhead and Drayton, N.D., said the petition signatures had been collected during much of the 17-month lockout period.

Heavy security at the hotel prevented them from going into the halls near closed Crystal meetings. Crystal President David Berg later said he didn’t know the union members were trying to get into the hall, but likely wouldn’t have allowed it.

In his own news conference between Crystal and Red River Valley Sugarbeet Growers Association joint meetings, Berg said his negotiating team will meet with the union if a federal mediator calls for one. Berg said the impact of the lockout is “diminishing rapidly” but added workers now are hired as temporary employees and are happily working at the rates in the rejected contract.

The temporary force accounts for 1,000 of Crystal’s 1,300 workers, Berg said. About 100 new employees are former union members. He said more than 500 of the union members either resigned or retired.

Frank Day, vice president of global commodities at Hershey Co., said the company is stepping up internal audits over sustainability issues such as waste, greenhouse gas emissions and labor issues. Day emphasized he had no concerns about the Red River Valley. He added that within five years, his company also will audit United Sugars partners, which includes Crystal, over issues such as labor and environmental standards. Crystal and its partners sell 2 million hundredweights to Hershey — about 1,000 rail carloads of sugar — annually.

Union officials in the past week had leveled various allegations in advertisements against Crystal. Here are the main allegations, and company responses:

· The dispute puts the federal sugar program in jeopardy. No political figure speaking at the meeting mentioned it as having any impact.The federal sugar program is technically run by controlling imports and not by spending, so isn’t the main target of budget reforms. Cost-cuttings is the biggest threat to the program, and only if the farm bill goes to the full House, which could happen in 2013. Berg wants a five-year farm bill.

•Company debt has increased by 2,100 percent. Short-term debt increased because of borrowing to handle the huge 2011 crop, but Berg said long-term debt has declined for 10 consecutive years and debt-to-equity ratio is nearly the lowest in company history. Riskey couldn't immediately explain the debt issue, and referred questions to AFL-CIO officials, acknowledging they were using short-term debt figures from Securities and Exchange Commission reports.

•Production costs have quadrupled. Crystal officials say this is largely a result of an accounting issue because of the early harvest. That creates inventories that fall under a “cost of goods sold” accounting category, making it appear that costs have gone up. Costs have increased because of the lockout.

The Crystal payment for the fiscal year 2012 (2011 crop) was $58.67 per ton, compared with $74.05 per ton for Wahpeton, N.D.-based Minn-Dak Farmers Cooperative. Labor costs could attribute to that difference, Crystal officials said.

•Crystal has warehouses full of unsalable “remelt” and has doubled of molasses byproduct because of inexperienced labor. Crystal acknowledged making more remelt — flawed sugar that can be reprocessed or remelted. They built more of this inventory than normal during the lockout, especially in East Grand Forks.

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