HARDIN, Mont. -- Western Sugar Cooperative is going to have a big crop this year, and the biggest part of it will be in the Billings, Mont., production area.
"We have a very respectable crop coming across Western Sugar," says J. Kent Wimmer, longtime director of shareholder relations and government affairs for the co-op, based in Denver, Colo. Western Sugar is the only beet sugar company in the country with all of its production under irrigation.
"The projected average would be 32 tons per acre, which would be a record for the cooperative," Wimmer says. "A lot driving it is that Montana crop, the potential for a record. They're looking at 38.5 tons up there right now, and it could be better than that if the weather continues to progress like it is."
Montana Western Sugar growers raise about 25,000 acres of sugar beets in six counties. About 9,000 acres are in Big Horn County. Western Sugar, based in Denver, Colo., has factories in Billings, Mont., Lovell and Torrington in Wyoming, Scottsbluff, Neb., and Fort Morgan, Colo.
Western Sugar markets about 10 million hundredweight of sugar each year under its Great Western retail brand name, a small percentage of its production. About 25 percent of the company's product goes into consumer packages, while another 25 percent is in industrial bags and 50 percent in industrial bulk. The company represents about 5 percent of the U.S. sugar market and about 10 percent of the beet sugar market.
ADVERTISEMENT
A family affair
Western Sugar has about 1,000 active shareholders involving 750 farming operations, spread across four states. About 200 shareholders are in the Billings area.
Shawn Nedens is a typical shareholder. Nedens farms near Hardin, Mont., with his brother, Carl, and three nephews -- Brett and Chris Nedens, and Michael Savage. The Nedens have been in the area since the 1960s, always raising sugar beets. Shawn was the youngest of four children. Three sons -- Roger, Carl and Shawn -- all went into farming, operating separately but in association.
Roger, who died in 2008, helped get Rocky Mountain Sugar Growers Cooperative formed in 2001, and was involved in its transformation to Western Sugar in 2002.
"We're sugar beet farmers, and we had to invest in it," says Shawn, a director for the American Sugarbeet Growers Association since 2009.
Back in the 1990s, the Nedens family raised only 600 acres of sugar beets. This year, they collectively raise 2,000 acres, accounting for a good share of about 8,000 acres of beets grown in Big Horn County, all for the Western Sugar Cooperative.
The Nedens maintain three- and four-year rotations.
"We take care of the land and keep it in good shape so we're not wearing it out," Nedens says. "You have to be very productive to make things work. Margins are tight. Everything revolves around sugar beets."
ADVERTISEMENT
All irrigated
The family had to expand to raise the rotation crops and work a mix of owned and rented land. They lease some land on the Crow Reservation.
Among other things, they raised 2,300 acres of two-row Moravian barley for MillerCoors brewing joint venture, delivered to Huntley, Mont. They raised 6,000 acres of winter wheat, including 1,150 acres irrigated. They also raised 1,200 acres of sunflowers, 160 acres of corn and 180 acres of alfalfa.
"The flowers look really nice -- expecting good yields on those," Nedens says.
The family's irrigation comes from the Two Leggins Water Users Association, which brings water from the Big Horn River to the head gates that go into the fields, charging growers per acre. On the reservation land, the water comes from the Bureau of Indian Affairs and is more expensive.
Land for irrigation sells for about $2,000 to $3,000, while dryland farmland runs $300 to $800 an acre. The area is in a pretty dry climate, normally producing 12 to 14 inches of rain in an average year. This year has been a bit above average, Nedens says.
Co-op payments
In Big Horn County, home to the famous Little Bighorn Battlefield National Monument from 1876, sugar has an important history.
ADVERTISEMENT
Holly Sugar built a plant there in 1937 and it operated until 1971. After that, growers raised beets for a Billings plant, built by Great Western Sugar Co. and later owned by British company Tate & Lyle, which ran it through 2001 when growers in Western Sugar Cooperative took over, finalizing the purchase in 2002.
Individual shareholders own patron preferred shares, which entitle and obligate the grower to raise an acre of beets for each share.
Western Sugar has a different pay system than American Crystal Sugar Co. in the Red River Valley of eastern North Dakota and western Minnesota. American Crystal pays out on a net proceeds system. Western Sugar pays an initial payment, based on 70 percent of a $24.50 per hundredweight sugar net selling price.
"The rest depends on how they get the sugar sold," Nedens says. "The final three payments are 10, 10 and 10 (percent)."
Wimmer says the final payment comes in October of the year following the crop.
Most rented land is on a cash rent or crop share system, where the landowner gets a set percentage of the value. The term "joint venture" isn't used. Typically, landowners get one-third share on grains and a 20 percent share on beets.
Farmers in Montana's Big Horn Valley have a lot of fall preparation costs that Red River Valley farmers wouldn't incur. They have to prepare beds in the fall, starting after combining in August and going into the end of September.
The immediate threat
ADVERTISEMENT
While there are always production challenges, Nedens says one of the most immediate threats facing beet growers is the influx of subsidized Mexican sugar and other factors that caused the price to plummet in 2013. Western Sugar is the first listed among companies in an alliance pressing for trade judgments to confirm the Mexican government is unfairly subsidizing and dumping sugar in the U.S. market.
Almost all the co-op's farmers grew their beets in 2014, despite poor 2013 financial results. The co-op charges shareholders a $385-per-acre penalty fine if they choose not to grow and deliver beets to the company, according to their share agreement.
Nedens is optimistic about a solution to the problems with Mexico. He sees it as "primarily a communication issue" between the U.S. and the Mexican governments over what they're going to export into the U.S.
"Their market was higher than ours when they were doing a lot of exporting into the U.S. We couldn't understand why they were doing that," Nedens says. "I think they had an oversupply issue, too. Hopefully we'll get something worked out that's manageable."
Prices have recovered some, from "literally breaking even or losing money to maybe being able to see some profits," this year.
"I think every producer realizes that in the past two or three years, the market was really high," Nedens says. "If it'd stayed that high, it might have been pretty comfortable, but we want a stable market. It would be nice if we could have $80 a ton for beets, but we can't survive on $35 to $40 beets. It works best when you get something in the middle of the road where we can keep our plants in good shape, do the upgrades, and farmers can upgrade their equipment."
Farming precisely
Down at the farm level, the Nedens are employing more precision agriculture to make things work.
ADVERTISEMENT
They do grid mapping to put fertilizer in the right places. They do prescription planting -- not so much on the irrigated Big Horn River valley ground, but on the dryland crops, where soil types vary more. They hire a Billings company to test the soil water-holding capacities, soil texture and nutrient levels for variable-rate production.
"The big turning point for the industry was Roundup Ready," Nedens says. "That allowed a lot of farmers, including us, to expand and still take care of the crop like it needs to be. Roundup-ready beets was a big part of it because the timing of the spraying isn't as critical and we can still take care of the weeds."
Nedens says he hasn't heard of any glyphosate resistance in his area.
Rhizomania disease was starting to be a problem, but the new varieties have kept that at bay.
"I think every region has their problems -- weather, disease, insects," Nedens says. "Sometimes it's easy to look over the fence and say it looks way better over there. The industry is pretty diverse. We can have a poor crop, but others have a good one. But overall, we're able to keep our supply pretty consistent."
