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Published March 21, 2013, 04:33 PM

Golden Growers total payout hits milestone

ND sweetener plant cash distributions surpass original investments.

By: Mikkel Pates, Agweek

MOORHEAD, Minn. — As of February 2013, cash distributions for owners of Golden Growers Cooperative, a high-fructose corn sweetener plant in Wahpeton, N.D., surpassed the $3.45 per unit that farmers originally invested to build the plant in 1995.

At the Golden Growers annual meeting in Moorhead, Minn., on March 21, co-op officials reported earnings per share increased to 36 cents last year, up from 34 cents per share in 2011. Equity has declined to $42.7 million from $46.6 million, but that’s by design.

Fargo-based Golden Growers is a 49 percent owner of ProGold LLC with American Crystal Sugar Co. of Moorhead. Fifteen years ago, the two companies leased the plant to Cargill, which now processes about 30 million bushels of corn into corn fructose at the location. About half of the corn comes from Golden Growers members.

“Our distributions to members has increased our income, which has reduced our equity in the cooperative over time, but we didn’t need the cash in our accounts, so (we’ve decided to) get it out to our members,” says Scott Stofferahn executive vice president of Golden Growers.

“We are thankful that we have a corn plant in a very advantageous corn market,” Stofferahn says. “Last year, we had drought in the Midwest. A lot of those plants were struggling” with the high price of corn, while North Dakota production increases have outpaced usage. Golden Growers officials noted that corn production has tripled in the 11-county area around Wahpeton since the plant was built.

The keynote speaker at the Golden Growers annual meeting was Owen Wagner, senior agricultural economist at LMC International, Raleigh-Durham, N.C., and one of the nation’s top sweetener market analysts. Wagner says U.S. high-fructose corn syrup markets are declining, but there are reasons to be optimistic.

Among Wagner’s key points:

•HFCS-55 (high-fructose corn sweetener containing 55 percent fructose, and the usual form added to drinks and foods in the U.S.) demand started to fall in the early 2000s. It was linked to a 20 percent per capita decline in soft drink consumption in the past 10 years.

•Demand in the U.S. doesn’t continues to decline, but the “pace of the decline is decelerating.” Some products that shifted away from sugar to HFCS have shifted back, partly because of high sugar prices in the past three years. Cool Whip, a product produced by Kraft, switched back in 2011, and Hunt’s ketchup switched back in 2012.

•Market growth for American HFCS producers are outside of the U.S., led by Mexico. In the past three years, U.S. exports to Mexico exceeded 1 million tons a year. “In 2013 we’re actually ahead of that pace” for exports to Mexico, Wagner says. “Amazingly enough, Mexico is facing a record sugar crop. Prices are falling and still they can’t get enough of this stuff.”

•High world prices also have prompted HFCS capacity expansion overseas. Countries that export grains and import sugar are in the best position to expand HFCS production. The U.S. imports sugar but its HFCS sector is “mature,” Wagner says.

The European Union and Russia could increase HFCS production. The EU’s Common Agricultural Policy is limited to 700,000 tons annually of HFCS, but that could change in 2015 and 2016.

“If the Europeans change their portfolio of sweeteners and mimic the way that we consume sweeteners as Americans,” their demand could increase to 7 million tons. “We’re talking about a potential 10-fold increase in corn syrup production in the EU, and your partner Cargill is aware of this, and they have interests in Europe, in Russia, as well,” Wagner says. “There is a lot of interest in entering into this untapped market.”

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