Minn-Dak co-op eyes second difficult crop

FARGO, N.D. -- In 2009, some 14,000 acres of Minn-Dak Farmers Cooperative beets are left languishing in the frozen fields. Co-op officials at this point are projecting an $80 million payout to growers.

FARGO, N.D. -- In 2009, some 14,000 acres of Minn-Dak Farmers Cooperative beets are left languishing in the frozen fields. Co-op officials at this point are projecting an $80 million payout to growers.

In the 2008 crop, some 33,000 acres of Minn-Dak's beets were stranded in the field, but -- because of a higher sugar price than expected and higher sugar content -- the Wahpeton, N.D.-based was able to pay out an $96 million to growers.

"The primary driver (for the projected 2009 crop reduced payment) is the reduced level of sugar in the beets this year," says Dave Roche, president and chief executive officer.

This year's sugar content at 15.5 percent is among of the lowest in the co-op's history, while sugar content was 17.1 percent last year and 17.4 percent in 2007. The projected payment for 2009 beets roughly translates to $40 per ton on harvested acres, or about $800 per acre in revenue.

"All in all, more dollars per ton, but fewer beets," Roche says of the 2008 result.


Yield in 2009 was about 20.5 tons per acre that was harvested. That's down from 24.8 tons in 2008 but equal to the 20.5 tons in 2007. It also doesn't count the unharvested acres.

The co-op contended with 12 inches of rain in some areas in October 2008. In 2009, farmers picked up 7 inches to 9 inches during October.

The co-op is expecting to keep plantings in 2010 steady at 115,000 acres and anticipates that Roundup Ready beets again will be available for at least next year, based on recent court rulings.

Doug Etten, chairman of the board, notes that while some farmers in the southern areas had an excellent crop in 2009, others were in the "heart of the area" that had lost beet acres two years in a row.

"For them, it is very difficult," he says.

Roche notes the wide variability in growing results is impressive in an area that isn't more than 60 miles north and south.

Lessons learned

From this year's crop, the co-op expects to produce 479 million pounds of sugar. Last year, the organization produced 543 million pounds of sugar, but that included about 200,000 tons of beets that were purchased from American Crystal Sugar Co.


Roche says this year's beets were misshapen by the cold, wet May and June. That made for more crevices in the beets themselves and more mud and processing expenses. The beets so far are storing well.

Roche says the co-op learned from the unpleasant 2008 crop results by considering an earlier start and looking for "windows" -- cases where they'd shut down in the afternoon because it was 70 degrees but situations where it was 40 degrees at 2 a.m.

"We formed a harvest management committee last year and looked at various variables in that and tried to make improvements as the harvest went along," he says.

Roche says the discussions in Copenhagen about carbon and climate change and the two sets of legislation in the Congress offer lots to worry about.

"As soon as 2012, the Kerry-Boxer bill in the Senate could impose a charge of about $2,500 per sugar farmer in the valley, and by 2025, that charge could escalate to $14,000 to $16,000. These are costs and charges that certainly won't help the economic viability of sugar beets."

Roche says farmers are concerned about climate change and "we'd like to do our part."

At the same time, Roche praised Rep. Collin Peterson, D-Minn., for including amendments in House versions of the bill "exempting agriculture from the effects" of the climate change legislation.

"Unfortunately, that exemption doesn't extend to the processing industry, the cooperatives," Roche says. "We certainly would like to see a link that our shareholders grow a crop that isn't marketable unless it's processed. We'd like to see some recognition of our agricultural involvement."


Sugar processing plants put out "a lot of carbon," Roche acknowledges. They use coal, but are working to lessen their coal output and energy costs.

Results from the 2008 crop year included a $92 million payout, which was $11 million less than the year before. Revenues were 79 percent for sugar, 10 percent pulp, 6 percent yeast and 5 percent molasses.

Consolidated revenue for the year ended Aug. 31 decreased by $18.5 million or 7.6 percent from the previous year. Revenue from sugar sales declined $23 million, or 11.1 percent, reflecting a 17.6 percent decrease in the hundredweights of sugar sold, and a 6.5 percent increase in the average selling price.

The annual meeting program featured a discussion about the early days of Minn-Dak, featuring Gerry Shannon, the co-op's first president, and Jim Link of Wahpeton, the co-op's first board chairman. Link says there are only five members from the original board who get together once a year, usually in the lull just before wheat harvest.

"We'll keep until there's none left," Link says.

Shannon retired to Florida, but three years ago, moved back to Wahpeton. There have been three presidents in the co-op's history -- Shannon, who retired in 1992, Larry Steward, who retired in 2000, and Roche, who has been at the post since 2001.

"Minn-Dak has a tremendous reputation," Link says, noting that many other co-ops, including the Dakota Growers Pasta Co., for which he also serves on the board, have looked to the sugar beet co-ops as examples.

Mike Hasbargen, Breckenridge, Minn., a former chairman of the board, was named the company's 2009 Hall of Fame recipient. His father, Warren, had been a board member from 1976 to 1985. He farms with his brother, Dave, and sons, Marc and Matthew.

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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