'Reasonably possible': Crystal explains obligation to deliver
MOORHEAD, Minn. — American Crystal Sugar Co.'s board and management on Wednesday, Oct. 16, notified shareholders of delivery policies in the face of potential challenges in harvesting after a blizzard and flooded fields.
Tom Astrup, president and chief executive officer, and Curt Knutson, a Fisher, Minn., farmer and chairman of the board, signed the letter, a copy of which was obtained by Agweek on Thursday, Oct. 17.
In the letter, the two said they were still "optimistic" that most farmers would be able to resume harvest and that the company would be "prepared to receive your crop when and for however long it is possible."
They said they had "hesitation" in sending out a letter to shareholders, noting growers' "track record of commitment." However, they decided to send it after receiving many "questions and expressions of concerns" regarding the "obligation to harvest and deliver your crop."
The "purpose of this letter is to clarify the cooperative's expectation that shareholders will do whatever is reasonably possible to complete their harvest," they said.
The two recognized the cooperative needs all shareholders "working together to deliver enough volume in order to efficiently spread the fixed costs" of the co-op and "allow for a fair and reasonable payment."
Specifically, the co-op managers spelled out that:
• The company's "Five Year Agreement" provides that shareholders "may be charged liquidated damages" equal to the company's fixed costs if shareholders fail to deliver their sugar beet crop.
• The co-op expects that each shareholder will use their "best efforts to complete" the beet harvest. If unable to deliver, the shareholder "must notify" the company. "The company will inspect the field and make a determination as to whether or not harvest is possible," the two explained in the letter. "If the shareholder fails to involve the Company in the determination of harvestability, the Company will charge the shareholder the amount of full liquidated damages with respect to the crop that was not harvested." In addition, a shareholder's "crop insurance coverage could be negatively affected if the Company has not agreed to release any unharvested acres."
• The board is "still evaluating the action to be taken" if the company agrees it is not possible to complete harvest, they said. "This might still include assessing liquidated damages. The more sugar beets we harvest the less likely this would be a necessary remedy to the inequity created by an extremely low beet payment on delivered sugar beets," the letter said.
Co-op officials declined to elaborate on the statement.