In his last annual Crystal meeting Berg addresses issues the sugar industry faces
FARGO, N.D. -- David Berg didn't want to talk about this being his last annual meeting as president and chief executive officer of American Crystal Sugar Co.
FARGO, N.D. - David Berg didn't want to talk about this being his last annual meeting as president and chief executive officer of American Crystal Sugar Co.
And he didn't.
Berg, 61, for the past year quietly and internally has indicated his intentions to retire at the end of August 2016. He has worked for American Crystal Sugar Co. since 1987 and has left the company since March 2007.
Berg delivered his ninth president's address at the meeting Dec. 3 without notes and without any hint of emotion or mention of his departure. About 1,000 people attended the event, which is held jointly with the Red River Valley Sugarbeet Growers Association annual meeting.
Berg was a key figure in many issues, including the recent bitter lockout of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union. It wasn't discussed at the meeting, but officials confirmed the company is working to start negotiations early on the next contract that is set to expire in late 2017.
Robert Green of St. Thomas, the co-op's board chairman, acknowledged the company last February hired a firm to start a national search for a new president and CEO, but emphasized Berg remains in full control for the next nine months. Green said the company on Dec. 4 would begin interviewing from a pool of about a dozen internal and external candidates.
Berg "not only was the right man for American Crystal for the last several years, he has been critical for the entire domestic industry" - a natural leader who was the "go-to guy" for negotiations in solving excessive sugar imports from Mexico.
In his address, Berg related results from a so-called SWOT (strengths, weaknesses, opportunities and threat) analysis. He said he's concerned about the spread of consumer pressures on candy makers to promote their products as free of genetically modified organisms. The anti-GMO issue would be a bitter pill for sugar beet growers, who struggled to have the right to use Roundup Ready technology in sugar beets, which made it easier to control weeds. Processed sugar contains no DNA, so GMO-free sugar is chemically no different than conventional sugar, beet industry officials say.
Berg was a key member of a U.S. and Mexico sugar trade negotiation effort to stem the tide of illegal sugar from Mexico. The situation came to a conclusion in October 2015, with an agreement that limits Mexico.
Berg, in his annual address, took direct aim at U.S. Sen. Ted Cruz, R-Texas, a candidate for the Republican presidential nomination, who has called "sugar subsidies" "corporate welfare." Berg said Cruz would rather hand over the U.S. sugar market to countries like Brazil, which subsidizes their sugar industry with $2 billion per year, while the American program is used only occasionally, and for far less.
"You don't want crony capitalism, you want subsidized socialism," Berg said, as if jousting with Cruz. “We have a good system to provide safe, affordable food for our country here, and we have a sugar program and we will defend it for a long, long time, hopefully longer than your political career lasts." After applause, Berg urged members to write checks for the company's political action committee. "This is how we stay in the sugar business," he said.
American Crystal growers earlier heard details about payments for the 2015 crop. The initial estimate of the gross payment is $45 per ton - higher than last year's final payment of $44. The 2015 crop payment will be reduced by a $3 per ton "unit retain," an internal loan from members.
Growers were also aware the record-high crop of 28 tons per acre on 397,416 acres, with good sugar content, will bode well for sugar producers. That's compared to the 23-ton yield on 411,213 acres in 2014. The 2015 crop sugar results are welcome in a general farm commodity price climate, where it will be difficult to make money in the coming year.
However, Crystal managers are concerned about the integrity of some of its piles south of U.S. Highway 2, but it isn't clear whether the cost will be a few cents per ton, or a few dollars. Problems are focused on about five piles and the company is working to move them through the processing plant more quickly.
Other speakers at the meeting included Tom Halverson, chief banking officer at CoBank, one of the major cooperative lenders in the country, said one of the big questions is when the increased employment will translate into increased hourly wages.
Halverson says annual growth for an economy should be 3 percent annually, but the U.S. hasn't achieved that since 2005. "The worry is we have stepped down to a permanently lower growth trajectory in this country, and if true that will have implications for economy and our standard of living in our future." He said the country might be looking at low crop commodity prices for a series of years.
CoBank doesn't expect to see "significantly higher interest rates for some time" and doesn't expect short-term interest rates to go over 1 percent in 2016 without changes to the economic outlook and some evidence of pressure from inflation.
David Wasserman, a political prognosticator for the Cook Political Report, said that if history is any guide, a moderate will overtake frontrunner Donald Trump, to win the Republican nomination.