American Crystal Sugar strives for ‘best in the world’ of sugar

FARGO, N.D. — American Crystal Sugar Co. on Dec. 3 put on its annual cooperative meeting using an unusual virtual format in the COVID-19 pandemic, but still staged the event from the venerable Great Hall of the Fargo Holiday Inn.

About 470 shareholders logged in and 140 employees watched the meeting live online.

Company information said that, with the projected $52 per ton payment to farmers and 10.1 million tons of production, the company’s payout from the 2020 crop is expected to be about $525 million — which is about 52% higher than the weather-disaster crop of 2019, which yielded $343.7 tons. (On top of the 2019 crop beet payment, co-op members were paid $82 million through federal disaster programs which went through the co-op but not to the co-op as a business.) To compare, the 2018 crop with higher yields paid out $609 million.

Tom Astrup, the cooperative’s president and chief executive officer, discussed the company’s strategic plan to be “the best beet sugar company in the world.” He listed several efficiency-related initiatives where the company is focusing.

Among other things, Astrup publicly discussed the company’s plan to construct “Dome II” — a second storage structure in the Chicago area. The co-op in 2015 built Dome I, a $40 million sugar storage structure at Montgomery, Ill., and put it into service late in 2016. The new Dome II will be about the same size and is projected to cost $25 million — less cost because rail and other infrastructure are already there.

The domes allow the company to reduce “toting” and freight costs and increase industrial bag sales in the important Chicago market. Dome I was designed to hold 2.2% of annual production for all partners in the United Sugars Corp., the selling combine that includes American Crystal. It was to be turned twice for a total of 4.4% of annual marketings.

The facility allows the company to better use rail capacity coming out of the Red River Valley and use its dedicated truck fleet to cost-efficiently increase delivery radius from Montgomery, which is about 45 miles west of Chicago. Astrup said the company is working to increase profit margins through increased retail and liquid sugar sales..

American Crystal which markets byproducts cooperatively through a partner in Midwest Agri-Commodities Co. That co-op is growing “non-traditional” markets for sugar byproducts, for products such as pet food, retail bagged shreds, and new non-feed applications for betaine.

Crystal’s board chairman David Mueller, who farms at Cummings, N.D., north of Hillsboro, said the co-op is glad to have the disastrous harvest in 2019 in their rear view mirror. Last year about one-third of the co-op’s acres went unharvested.

Mueller said the pain of the 2019 harvest was “softened” by the $82 million disaster aid provided by Congress. The board unanimously passed a fixed-cost policy so that shareholders would pay their share.

In 2020, Mueller described challenges including COVID-19, and credited manager and employees with so far preventing a “major outbreak in any of the company’s factories to date.”

He noted the company is instituting a new “comprehensive active farmer policy that will move us back to our cooperative roots.” He urged shareholders to sign up for a webinar on Dec. 8, to explain the new policy.

Mueller underlined that Crystal’s impact is about people. The company has 2,640 shareholders and 1,600 regular employees. “Add in an estimated 1,000 farm employees, 1,500 harvest employees and 5,000 seasonal farm workers and we have about 12,000 people directly involved with this farmer-owned co-op,” he said.

Mueller introduced new members Chris Hong, representing the Hillsboro Factory District, replacing Cindy Pulskamp, who in 2017 was the first female elected to a board position in the co-op’s history. Bruce Newhouse of Fisher, Minn.,was elected to succeed outgoing board member Don Andringa, Crookston, Minn.

Astrup listed a number of areas of emphasis in the co-op’s quest to be the best. Among them:

• Employee safety. Conduct regular internal audits and improve coaching, housekeeping and safety documentation, as well as data analysis and incident investigations.

• Staffing, culture and engagement. The company is increasing surveys to see “how well we communicate, how well we listen, how well we train” and recognize contributions, Astrup said. The company pays for “skills opportunities” and is adjusting wages to be competitive. One measure of success is turnover rates.

• Beet receiving. The company has implemented a plan to match receiving and storage capacity to the company’s increased slice capacity. The company is studying its piler infrastructure and ways to reduce maintenance. They’ve expanded piling surfaces so that piles are shorter and can be maintained more efficiently.

• Minimizing pile sugar losses. The company is working to improve the speed and energy-efficiency of freezing beet piles — “particularly in those winters in which we lack adequate sub-zero temperatures to do it well,” Astrup said.

• Expanding production capacity. “We continue to implement, refine and develop new plans to expand our production capacity to offset increased yields on the farm, halt the decline in the planting tolerance, and improve cost efficiencies,” Astrup said. He said engineers and managers continue to set daily slice and sugar production records. “Future demand growth will guide future expansion plans,” he said.

• Maintenance excellence. The company is trying to improve maintenance excellence. That results in increased capacity use, sugar extraction and cost-efficiency. He noted it is increasingly difficult to hire skilled employees for these positions and that the company is investing in training.

• Cost efficiency. Among other things, the company has invested in near-infrared spectroscopy in the quality laboratory to improve accuracy, speed and efficiency. “We identified energy and pulp disposal costs as cost saving opportunities," Astrup said. The co-op has invested in pulp presses at Drayton, East Grand Forks and Crookston plants to reduce pulp moisture, which cuts drying costs, which increases drying capacity, which increases pulp revenue, which reduces pulp disposal costs. “We call that a win, win, win,” Astrup said.