‘A nice rebound’: American Crystal Sugar's 2021 beet crop surpassed expectations

FARGO, North Dakota — It’s been a good year for American Crystal Sugar Co., shareholders heard when they gathered for their annual business meeting on Dec. 2, 2021. Company officials were thankful for a year that ended with strong sugarbeet production after “an explosion of late-season moisture and heat,” and strong economics.

This year’s co-op meeting was in-person, after conducting much of it mostly virtually in 2020. The meeting is held jointly with the Red River Valley Sugarbeet Growers Association, an association of beet producers.

American Crystal's total payments for the 2021 crop are currently forecast at $660 million, a 16% increase from the total payment for the 2020 crop.

Tom Astrup, American Crystal president and CEO, called the crop year a “nice rebound” after earlier concerns about a short crop. The initial 2021 crop forecast payment was announced at $60 per ton on an average of 28.7 tons per acre, which is just shy of the $60.58 final payment made on the 24.8 ton per acre yield.

“We’re seeing a little bit of strength in the sugar market,” Astrup said. “We’re seeing considerable strength in the market for our agri-products — beet pulp and beet molasses — products that don’t compete directly with corn but are tied to the corn price index.”

On the negative side, sugar content in the 2021 crop was 18%, down from the 18.4% in 2020 — worth about a $3 per ton reduction.

Looking ahead, Astrup said soil moisture across the company’s factory districts are “still dry,” and anxious about moisture for the 2022 crop.

Over the last several years the company had made investments in beet receiving and in beet storage, "preparing us for larger crops,” Astrup said. “But shorter crops left them unseemingly unpaid for. This year we were ready.”

The company in 2016 harvested the same size crop, at 11.8 million tons. But since then, American Crystal has added 110,000 tons of daily receiving capacity and 14 days of beet storage ventilation, "to prepare us to handle this crop better than we otherwise would have, and to handle even bigger crops down the road,” Astrup said.

Factories were also improved, but “never yet tested by a good crop,” until this year. The company set an average daily slice rate of 41,000 tons per day in the 2020 crop, and is off to a similar start this year.

Astrup noted the company brought natural gas to their Drayton and Hillsboro factories in North Dakota, which increased capacity. And they brought natural gas to the 2,500 residents of those two communities for the first time ever.

The company’s labor contract expires July 31, 2021. Talks for that will start at some point between now and then, he said.

“Whenever both of us agree it’s time to talk, we’ll talk,” Astrup said, in a news conference. “Sometimes that’s February, sometimes that’s May, sometimes that’s June.”

In his remarks to shareholders, Astrup made a special effort to thank employees, noting that while some in the workforce were able to work remotely, others — producing sugar — had to show up. (Randy Niles, the company’s safety manager, noted a multi-year reduction in safety issues.)

Said Astrup: “We had employees that continued to show up, every day, at the hour and take the precautions they needed to take, as cumbersome as they were, as uncomfortable as they were, and not only continued to make the sugar but to do it in the highest quality fashion, and in a safe fashion, and to move us forward of our strategic initiatives. We never missed a beat.”

The meeting — an annual ritual of reflection for the industry — also served to mend political fences.

Astrup marked the election loss of former House Agriculture Chairman Collin Peterson, D-Minnesota, — “perhaps the greatest congressional champion of agriculture in our time,” who lost his 2020 election despite heavy support from sugar farmers. But in the same breath, he said “Hello, and we welcome,” to Rep. Michelle Fischbach, R-Minnesota, the Republican who won the seat, saying she has “hit the ground running in support of agriculture.”

Astrup said they welcome Peterson’s return as a part of Combest, Sell & Associates, a lobbying firm on behalf of food and agriculture.

Astrup became emotional when mentioning the recent death of Jim Horvath, American Crystal president and CEO from 1998 to 2007, who was instrumental in setting the stage for the company’s current success — designing features of the 2002 Farm Bill, reimposing marketing allocations and acquiring other sugar factories, including Sidney (Montana) Sugars Inc., “which fulfilled his vision dealing with the growth constraints mandated by marketing allocations.”

Minnesota Gov. Tim Walz, a Democrat, took the stage for 20 minutes, thanking the sugar industry for taking the time to educate him on the sugarbeet industry. Walz, whose family homesteaded in Nebraska, emphasized a need for people to communicate with people who have different points of view.

Walz, who last spoke to the meeting as a Minnesota congressman a decade ago, said the population and congressional members are “all consumers, but they’re not all producers,” so the industry needs to keep educating Congress.

Walz, who served on the U.S. House Agriculture Committee when the 2014 and 2018 farm bills were passed, said the infrastructure measure recently passed in Congress will make it easier for farmers to “get your products to market.” He described the bill as the biggest infusion into the infrastructure since the Eisenhower administration’s interstate highway initiative.

David Mueller, Crystal board chairman from Cummings, North Dakota, emphasized the importance of the farmer-owned cooperative. Mueller stepped down after 12 years on the board, including two years as chairman.

Astrup hailed Bryan Edwardson, as new president of Midwest Agri-Commodities Company, on Nov. 1, 2021. Edwardson replaces Andy Ford, who is retiring as president after six years. The company markets beet byproducts as livestock feed, horse feed, pet food and road de-icer.

“This year, for the first time ever, we’ll enter the retail bag pellet market in distribution with a national retailer,” Astrup said.