WAHPETON, N.D. — Minn-Dak Farmers Cooperative officials and shareholders are working to get the co-op back on its feet after a string of financially tough years.

The single-plant sugarbeet processing co-op held its 48th annual meeting on Dec. 10 and offered an initial net beet payment estimate of $30 per ton, a figure that members hope will go up.

Pat Freese, Kent, Minn., chairman of the board of Minn-Dak Farmers Cooperative,  held its 48th annual meeting partly in person, partly streamed on line, Dec. 10, 2020, from Wahpeton. Freese, pictured at last year's meeting, said the co-op said the co-op is poised to turn upward after three tough payment years.  File photo taken Dec. 12, 2019, Fargo, N.D. Mikkel Pates / Agweek
Pat Freese, Kent, Minn., chairman of the board of Minn-Dak Farmers Cooperative, held its 48th annual meeting partly in person, partly streamed on line, Dec. 10, 2020, from Wahpeton. Freese, pictured at last year's meeting, said the co-op said the co-op is poised to turn upward after three tough payment years. File photo taken Dec. 12, 2019, Fargo, N.D. Mikkel Pates / Agweek

“In the long run, I think Minn-Dak will be viable, sustainable going forward,” said Pat Freese, 61, chairman of the board for the 460-member co-op, and a farmer from Kent, Minn. “Once we are completely back on our feet, which I think is right around the corner, we’re going to hit that ‘gold standard,’ and once we have a few crops under our feet that are average or above-average, I think when people look at this in the rearview mirror, and say ‘I’m really glad I made it through that mess.’”

The COVID-19 pandemic meant the meeting was held both virtually and in-person. Fewer than 50 people attended at the Wahpeton Events Center. All incumbents on the board who had continued eligibility retained their seats. Freese is in his final three-year term. In a post-meeting interview with Agweek, Freese said co-op bylaws allow motions from the floor, so the meeting required a quorum. The co-op counted 152 attending the live-streamed meeting online.

Newsletter signup for email alerts

The co-op survived the “ugly” 2019 crop year, mostly because of federal ad hoc disaster money. With a third of the crop volume abandoned in the field because of rain, snow and freezing, the co-op embraced funding through the Wildfire and Hurricane Indemnity Program-Plus, or WHIP+.

Minn-Dak funneled about $44 million to shareholders, through the WHIP+ program, shepherded through the federal government by House Agriculture Chairman Collin Peterson, D-Minn., and by U.S. Sen. John Hoeven, R-N.D., chairman of the Appropriations Committee's subcommittee on agriculture.

Minn-Dak’s disaster formula rewarded producers who “made a strong effort, and went out every day and battled in the mud and freezing conditions,” Freese said. The co-op needed to get beets out to process, spreading out the overhead costs.

A unique ask

Peterson’s failed 2020 re-election campaign, in the late going, asked Kurt Wickstrom, Minn-Dak President and chief executive, to say something nice about the relief.

Wickstrom appeared in a television advertisement, aired late in Peterson’s failed re-election bid.

Freese, who had approved Wickstrom’s response, acknowledged the campaign statement wasn’t popular with everybody. “It was a struggle for some, understandably so. It was appreciated by some, understandably so,” he said.

Minn-Dak usually “doesn’t care to endorse political candidates,” Freese said. But Peterson’s request was “unique and presented itself at a point in time” where the huge financial impact had just come. “In a normal year, under normal circumstances something like this wouldn’t occur,” he said.

“We looked at it, that, if John Hoeven were asking the same question under the same circumstances, the board would have done the same thing," he said. “It was viewed about what was best for the industry and for agriculture.”

“It’s kind of tough when somebody in that capacity asks you a question in that nature, and to try to say no is kind of a struggle, when he just helped you secure funds that really helped you in the bottom line,” Freese added. He said the presentation perhaps “didn’t turn out exactly the way we anticipated.”

In its annual reorganization, the board approved Wickstrom’s ongoing appointment as CEO.

Members of American Crystal Sugar Co.’s farmer leaders had helped create a Super Political Action Committee that supported Peterson’s failed bid. But the co-op itself was silent.

Freese underlined that Minn-Dak intended no disrespect for congresswoman-elect Michelle Fischbach, R-Minn., and hoped that that as time goes on, Fischbach would have the “same take and will give the same enthusiastic support as Collin has.”

2020, beyond

Minn-Dak officials discussed a 2020 crop year where seeds went into the ground in good condition with good stands. Lower-than-expected August rainfall and cercospora leaf spot disease reduced some of the expected yield. The crop was short of the eight-year Olympic average — just over 24 tons per acre with sugar content just below 16.9%. Harvest conditions were excellent and processing has been good, Freese said.

The co-op had put $20 million in its capital expenses for the just-completed fiscal year.

“We’re getting to the point now where we have invested a good amount of money over the last years and have put a number of components in that are getting us back … and the results are showing up in this processing campaign,” he said. He said the co-op is also investing in personnel to use the equipment. The co-op has about $6 million more to invest in a “crystallizer,” and after that should be more up-to-date.

“The payment is not where we would like it to be, but that is the unfortunate circumstance when you don’t have the full amount you would like to process,” he said. “Unfortunately, the profit or the gravy is taken off at the top, but that’s the fact of how the business operates.”

Minn-Dak payments in the 2012 and 2013 years reached the $70 to $75 per ton range. That put share prices in the $6,000 per share range.

Freese acknowledged that Minn-Dak’s results often are compared to American Crystal Sugar of Moorhead, Minn., a separate co-op with five factories in the central and northern Red River Valley. This year, Crystal announced a $52 per ton “gross” payment estimate, from which items are subtracted. Freese said Minn-Dak’s system is a “net” payment. American Crystal's 2020 crop was roughly the same yield, but produced a higher sugar content.

Obvious comparison

Freese acknowledged that share values for Minn-Dak have declined. Share prices today are about $500 per share, although some have reportedly sold for as little as $350 per share.

One Minn-Dak share allows the planting of some 1.47 acres of beets, with a tolerance of .05, meaning up to 1.52 acres per share or as low as 1.42. Share values at $500 per acre, divided by 1.52, equals $329 per planted acre.

To compare, American Crystal shares, backed by stronger per-ton payments, recently sold at $3,800 per share, are different in that .83 acres per share can be planted. That puts the planted acre cost at about $4,578.

Freese said Minn-Dak share prices have increased from last year, but not much. “I believe what will transpire, as time moves forward, as the payment increases, the share value will continue to increase,” he said.

If the co-op gets back on-track with its processing efficiency, and if they get an average, or even above-average crop, then share values could increase. Shareholders prefer higher valued shares, especially if they’re selling, and those that are buying prefer lower-prices shares.

Relatively low priced shares have been an opportunity for some producers who have bought shares — both last year and this year.

“They perceive it as a good value going forward, because they don’t believe it’s going to get any lower,” Freese said of those who are buying in. “They see the price going up (in the future). They have confidence in the facility and the management team.”