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Published May 22, 2013, 05:19 PM

Times not so sweet for sugar

Weather and prices hurt the sugar industry, but union workers locked out of American Crystal Sugar Co. since August 2011 are heading back to work.

By: Jonathan Knutson, Agweek

A tough year in the sugar beet business became even tougher this week.

Heavy rains in the northern Red River Valley will further slow sugar beet planting and could allow American Crystal Sugar Co. growers to plant only 430,000 to 440,00 of the 458,000 acres originally planned, officials of the Moorhead, Minn.-based farmer-owned cooperative said.

The weather woes come on top of low sugar prices, a recently concluded lockout of union workers and other challenges in Washington, D.C., to the U.S. sugar program.

“It hasn’t been an easy year,” said David Berg, American Crystal’s president and CEO.

Berg and several other American Crystal executives met Wednesday with Agweek.

World sugar prices were high in 2011 and 2012 because of drought in several major sugar-producing countries and tight worldwide inventories. But prices dropped sharply after big U.S. sugar beet and sugar cane crops, as well as a big Mexican crop, led to large world sugar supplies.

“There’s an absolute glut, a surplus” of sugar on world markets, Berg said.

Because of the lower prices, American Crystal estimates that its growers will receive $40 to $45 per ton for their 2013 crop. That would be down from $63 per ton for their 2012 crop.

As of Wednesday, American Crystal growers had planted an estimated 372,000 acres. Farmers south of U.S. Highway 2 generally are wrapping up planting. Producers north of the highway, however, were delayed by a late, cold spring; heavy rains in the past week make things even worse, cooperative officials said.

Growers are legally obligated to continue trying to plant their sugar beets until June 10, said Jeff Schweitzer, American Crystal spokesman.

The projection of 430,000 to 440,000 planted acres is just an estimate, cooperative officials stressed.

Union agreement

On April 13, union employees of American Crystal approved a new contract. They had been locked out of their jobs since August 2011 over contract disputes.

Union workers will be reintegrated into the factories on Tuesday, May 28, Berg said.

American Crystal, the nation’s largest sugar beet producer, operates processing plants in Moorhead, Crookston and East Grand Forks, all in Minnesota, and in Hillsboro, N.D., and Drayton, N.D.

The union has lost about two-thirds of its membership since the lockout began. Those workers have retired or otherwise left the union, Berg estimated.

Current union members will get their old jobs back, if their jobs still exist. If a job doesn’t exist, the union member will receive another position with the organization. Former union members can, if they choose, apply and compete for new open positions, Schweitzer said.

American Crystal management has stressed that returning union workers must work productively and respectfully with replacement workers and supervisors, Berg said.

Galyn Olson, a local union president from Hillsboro, said in a telephone interview that “respect will have to come both ways. But I think things will work out.

“The main thing is we’re happy to get back to work and get a paycheck,” he said.

Olson also confirmed that union membership has dropped by about two-thirds.

Sugar program attacked

Berg, in discussing difficulties in the sugar business, pointed to efforts in Congress to revamp the U.S. sugar program.

Under the program, imports of foreign sugar are restricted. Supporters say the program provides a reliable supply of high-quality sugar at affordable prices. Critics say it inflates U.S. sugar prices.

Recent high sugar prices intensified opposition from critics of the U.S. sugar program. They include big users of sugar and free-market advocates such as the Cato Institute, Berg said.

“It’s made their resolve very strong,” he said.

After Berg met with Agweek Wednesday, the Senate voted against an amendment to the U.S. farm bill that would have made changes demanded by sugar program critics.

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