Big crops, big losses are the story for Minn-Dak in 2008

FARGO, N.D. -- Minn-Dak Farmers Cooperative of Wahpeton, N.D., posted a good year for some growers, but heavy losses for others, as some 850,000 tons of beets -- 31 percent of the acres -- were left in the field in 2008.

FARGO, N.D. -- Minn-Dak Farmers Cooperative of Wahpeton, N.D., posted a good year for some growers, but heavy losses for others, as some 850,000 tons of beets -- 31 percent of the acres -- were left in the field in 2008.

David Roche, president and chief executive officer at Minn-Dak Farmers Cooperative in Wahpeton, N.D., smiled at a news conference during the company's annual meeting Dec. 9 in Fargo, N.D., but the message was not happy.

"I would estimate the value of the unharvested beets to be in excess of $36 million," Roche says. "A significant loss impacting many, many of our shareholders. Although we cannot guarantee that this will not happen again in the future, we are taking steps to re-examine our harvest procedures and better prepare ourselves to deal with such circumstances in the future. Those beets that were harvested are extremely muddy and are presenting challenges as they are processed in the factory."

Minn-Dak has announced a net payment of $40.02 per net ton of beets delivered, for those who had crops, against a 24.8-ton average yield on the acres that were harvested.

Who's calling the shots?


Minn-Dak has purchased some 200,000 tons of beets from Crystal to keep its factory operating longer. Even with the purchased beets, the processing campaign could end as early as mid-March and certainly no later than mid-April.

Roche says he's "amazed at the resiliency" of farmer-members and acknowledges some growers are concerned about how the harvest decision-making process is done at Minn-Dak.

"Who's involved? Should we have a broader group of people involved? Should we be looking at some of the new technology that's out there, in terms of measuring beet temperatures?" Roche asks.

He says the co-op was "within a few days in the beginning of October" where harvest may have occurred. There were a couple of warm days where it got cool enough in the 50s where "we should have been nipping at that edge and taking some of those beets."

Roche notes that American Crystal Sugar Co. of Moorhead, Minn., uses techniques that measure temperature of beets in the field. He says the co-op doesn't want to pile warm sugar beets, which is a problem when it hits 70 degrees on Oct. 1.

Even with any change in procedures, however, there likely still would have been a significant loss, Roche says.

"All in all, I'm not sure any co-op can cope with a foot of rain in the month of October," he says.

Using these techniques, the co-op might have saved 35 to 40 hours of beet harvest. The rule of thumb is 200,000 tons in a 24-hour period.


"Could we have done that? Maybe. Could the Lions be better if they'd have drafted Peyton Manning?" he says.

Doug Etten, board chairman, says crop insurance insures a unit within a section of land. If 30 percent of the beets within a section are harvested, crop insurance is reduced by the tons harvested.

"There'll be significant crop insurance because there are some guys that won't get much of anything," Etten says.A number of growers had severe losses, with some 70 percent to 80 percent of their beets remaining in the field. Crop insurance varies on what kind of guarantee of losses -- 55 percent, 65 percent -- a farmer selected.

"There's a few guys that didn't have any crop insurance, which will be extremely difficult. If Minn-Dak can get our payment up, which is our hope -- but you never know how that turns out -- it'll be a good year for most of us, but extremely tough for a few."

Luther Markwart, executive vice president and chief executive officer of the American Sugarbeet Growers Association; Jack Pettus, vice president of government affairs for the American Sugar Cane League; and Jim Weismeyer, vice president of Informa Economics Inc., spoke to Minn-Dak members.

Weismeyer says sugar did a remarkable job in the 2008 farm bill and says that they could have asked for more.

Insurance programs

Weismeyer also says the sugar industry could have asked for a pilot program for a new sugar revenue insurance program, which is something that has been roiling around for the past three or four years.


The first should be to establish a pilot program, Markwart says. It would be directed primarily to the western, irrigated states, where crop insurance participation is lower than it is in the Red River Valley. In the 2008 farm program, the government has a new revenue "assurance" program, where the government is picking up some of the expense, Markwart says.

Three years ago, a pilot project focused on "stage removal" for the Red River Valley area, which could turn into new policy.

An example of its impact is where someone plants beets and it gets too late to plant beets again and the replacement crop is dry edible beans. Under the existing program, "you would get a portion of your indemnity on your sugar beets because you're only in Stage 1. In Stage 2, you're going through harvest, and if you didn't get them harvested, you had more expenses in producing that crop so you'd get the higher indemnity.

"What we'd do is remove the 'Stage 1' so that if you lost it earlier in the year, you'd get the indemnity for the entire year because most of your production costs are incurred in the first stage."

Roche says there are no viable insurance programs in place for beet piles to stay in storage, as well as market conditions. A new product might protect a crop "all the way through to the sale of the product" so a revenue product would be beneficial. Crop insurance usually doesn't extend to the pile, once the co-op has agreed to accept the beets.

Markwart says sugar growers is looking to develop a crop revenue insurance program, which would protect farmers not only losses in the field, but reductions in price. (That's different than revenue "assurance," where the government provides coverage.)

The industry has been working on it for nearly four years. The USDA Risk Management Agency put the issue in a holding pattern, but that may move forward after the farm bill. Markwart says he'd like to see the program approved in 2009 and available to producers in 2010, but cautions there are "no guarantees."

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