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Del Nollmeyer, a Savage, Mont., producer, started planting April 18 -- the same day Sidney Sugars announced farmers had signed contracts on 20,000 acres. But Nollmeyer isn't happy about the situation. (Kim Nollmeyer, Special to Agweek)

Sidney Sugars growers agree to payment cut

SIDNEY, Mont.—Sugar beet growers for the Sidney Sugars plant on April 12 voted to accept an offer for 2019 beet production.

American Crystal Sugar Co., of Moorhead, Minn., owns the plant. The grower contract is negotiated every three years, but each year the growers decide individually whether they'll sign the contract. The vote called for $3.50 per ton reduction from the 2018 crop year. The cuts are over three years, and increase to $4 in 2020, and $4.50 in 2021.

Members of the Montana-Dakota Beet Growers Association are worried about the ongoing viability of the plant, but also are concerned about declining income from growing beets. They earlier had rejected a similar proposal, but voted in favor of it, after some changes regarding payments for the "early harvest" premium, which is similar to what is called the "pre-pile" harvest in the Red River Valley.

Scott Buxbaum, of Fairview, Mont., president of the growers association, said he couldn't immediately comment and said he will not be revealing details from vote totals.

Don Steinbeisser of Sidney is a former president of the grower group. He co-owns VS Inc., a farm involved in grain, cattle and sugar beets. Steinbeisser said the contract equates to $44 per ton to $45 per ton in the first year, which varies according to sugar content.

About 75 growers produce for the plant. Growers raise 31,000 to 32,000 acres of beets a year, with an average crop recently totaling about 1 million tons.

Steinbeisser said the vote that had to pass by a simple majority of acres. "It was a very close vote," he says.

Ready to go

Kim Nollmeyer, Special to AgweekSteinbeisser and others said the approval vote was expected, in part because of the time of the year. "Most people have the acres ready to go," Steinbeisser said. "Fertilizer was (applied) last fall."

Planting started April 18.

He said some growers in southern areas have indicated the price isn't enough to continue growing after this year. Some can increase their efforts on other enterprises, particularly cattle.

Sidney Sugars sent out a text April 18 that farmers had signed up enough acres, more than 20,000, to begin planting. "We expect more than that," Steinbeisser said.

Del Nollmeyer, a Savage, Mont., producer, was in the tractor planting the same day.

Nollmeyer says he's been dismayed by the fact that Crystal officials have said that for every $1 per ton they can cut the payment equals $1 million in revenue for the American Crystal.

"They've actually said this, that none of that extra $4 million (from the contract price cut) is going to go into this factory," Nollmeyer says. "I think that's a tell-tale. Why would you put money into a factory that is going to close?"

Brian Ingulsrud, Crystal's vice president of agriculture, serves as chief operating officer for Sidney Sugars Inc., which employs about 200 people, about of which are full-time. "We are pleased that we were able to reach an agreement that will help sustain the operations at Sidney, and continue to provide good jobs in the area, and an opportunity for growers in that area to continue to raise sugar beets," Ingulsrud said.

'We truly do'

Kim Nollmeyer, Special to AgweekIngulsrud added, "We truly do want to be able to operate the factory, but we have to do it at a profit, and we haven't been able to that in the past few years. There had to be an adjustment to make it feasible to be able to operate it."

Steinbeisser said the payment is less than the $51 per acre payment American Crystal shareholder-growers will be paid for 2018 crop beets in its latest projection.

He acknowledged there are several differences, including the risk in ownership of plants.

But Steinbeisser also notes that farmers in the Sidney area have different costs of production. Crystal shareholders can raise a 28-ton beet crop and not irrigate them, he said. Also, farmers that irrigate are limited on acres because of the labor involved in managing flood irrigation systems.

Growers for the Sidney plant in 2017 formed Big Sky Sugar Cooperative with hopes of purchasing the plant from American Crystal.

The plant initially was built by Holly Sugar Co. in 1925. Crystal purchased it and two other plants in 2002 when the industry changed to allow processors to divvy up the domestic market in "allocations" while allowing 11 to 13% of U.S. sugar to be imported by key Carribean countries.

Negotiations on the purchase have stalled, both sides agree. The asking price for the facility didn't go up, but ancillary costs for things like human resources and computer software added up so the plant wasn't feasible to buy, Steinbeisser said.

Crystal is owned by 2,650 shareholders in the Red River Valley and has North Dakota factories in Drayton and Hillsboro and Minnesota factories in Crookston, East Grand Forks and Moorhead.