Crystal projects $46/ton and announces Drayton expansion
FARGO, N.D. — American Crystal Sugar Co. officials announced the company is expanding its Drayton, N.D., factory at the farmer-owned cooperative's annual meeting on Dec. 7, in Fargo, N.D.
Tom Astrup, the Moorhead, Minn., co-op's president and CEO for just over a year, said the projected initial gross beet payment for 2017 beets is $46 per ton, which is better than last year's final payment of $42.45 per ton for 2016 beets, primarily because beets are sweeter and more valuable.
Astrup said the company spent up to $20 million to $25 million on the Drayton, N.D., factory in the summer of 2017 and will do the same in 2018. That building project likely will span four or more years. They'll spend $100 million and expect to increase their slice capacity in that factory by increasing that factory's output by about 30 percent and the company as a whole by 5 percent to 7 percent.
Astrup said the expansion was chosen for Drayton in part because of the number of beets now grown there and the desire to process more there rather than having to truck them to other factories farther south.
This is to "take advantage of our yield increases" and hope that with greater processing, the company won't have to cut acres more, Astrup said. The company produced 12 million tons of beets on about 400,000 acres, compared to producing nearly the same amount but on 500,000 acres a decade ago.
Astrup acknowledged that the company has talked about potential long-term plans to expand the East Grand Forks, Minn., plant in a five- to 10-year outlook. Nothing has been approved there, he said.
Robert Green, a St. Thomas, N.D., farmer and chairman of the board, presided over his last annual meeting as he reached his term limit. Green was the longest-serving chairman in the company's history. Green said this was an important year, with the company putting into play a $45 million domed sugar warehouse in the sugar-intensive Chicago market, victories on agreements enforcing the North American Free Trade Agreement, a new market sending beet pulp pellets into China's growing livestock market, and completion of a new labor contract without any strike or lockouts.
The joint annual meeting with the Red River Valley Sugarbeet Growers Association featured
National Farmers Union President Roger Johnson, who warned beet growers not to "rest on your laurels" in a time of great uncertainty in Washington, D.C., which may affect whether and when a new farm bill safety net can be passed.
Johnson says the NFU wants a safety net that "doesn't kick in when times are good." He said any bill needs to be supported by production agriculture, the "conservation community" and by the nutrition community, where 75 percent of the ag bill spending occurs.
Johnson praised sugar growers for providing political action committee support to allow their industry to protect them during unpredictable political times.
"We are in a politically disruptive time when things are said and done that never would have been countenanced" in the past, he said.
NFU opposed the Republican-led tax reform bill, which will add $1.5 trillion to the deficit. Johnson said farmers individually may be better off in the short term, but he said the so-called "paygo," or pay-as-you go systems, with offsets in spending which will impact federal farm programs that are important to sugar producers, who grow crops other than beets. He noted that the Agriculture Risk Coverage and Price Loss Coverage programs that cover shallow revenue losses, may be "wiped out."
Astrup said the co-op is still trying to get a Section 199 tax deduction into the new tax reform package, even though it doesn't appear in either the House or Senate versions of the bill. He didn't say how that would happen. The tax issue could cost 500-acre growers $15,000 each.
Courtney Gaine, president of The Sugar Association, dubbed the "scientific voice of the U.S. sugar industry," said the sugar industry is dealing with food companies busy reformulating products to reduce sugar and that "current demand may change moving forward." She cited programs like the "Coke Zero Sugar" campaign, which has been successful to the detriment of sweetener producers. Gaine said consumers need to be told the "great story of where sugar comes from."
North Dakota Gov. Doug Burgum listed a number of Donald Trump administration's "pro-agriculture" accomplishments and responsiveness. The state of North Dakota is working to improve drone development, workforce development through education reforms and community building. Burgum said the state is looking to attempt a trade mission to China in 2018.