VIDEO: Crystal Sugar CEO David Berg bids adieu

MOORHEAD, Minn. - His mantra is “sugar is sunshine” but that’s just how he likes to communicate the goodness of sugar to consumers and legislators.

David Berg, 62, will attend his last board meeting on Aug. 24 as CEO of American Crystal Sugar Co. He served almost nine years in that position, and a total of 29 years with the company.

Tom Astrup, who became American Crystal’s president in March 2016, will become CEO at the end of August.

Berg managed one of the nation’s largest and most successful examples of a closed cooperative, owned by 2,800 farmer-shareholders. Crystal is the largest player in a sugar industry that puts $4.9 billion into the region’s economy and is unrivaled for political influence among ag groups.

Despite its economic importance, Berg says agriculture, and the beet industry in particular, often fades into the background. “We don’t have ‘A Million Cups’ every week to talk about agriculture, like they talk about new technology,” he says. It’s just not that glamorous.”

Into the story

Berg grew up in Moorhead, Minn., and earned a mass communications and broadcast degree, and an economics minor from Minnesota State University-

Moorhead in 1978. He worked for two years as a television reporter for WDAY TV in Fargo, N.D., and in 1978 was awakened to agriculture’s complexity when he was interviewing the legendary Al Bloomquist, the statesmanlike vice president of governmental affairs, and later the president, for American Crystal. Berg heard Coca Cola was moving away from using sugar in products and were instead choosing high-fructose corn sweetener, and he wondered how the change would affect American Crystal.

“Al was a calm, seasoned person,” Berg remembers, and Bloomquist knew how the sugar program could adjust to move the sugar somewhere else. Bloomquist encouraged farmers to buy the company from its corporate owners and make it a closed farmer-owned cooperative.

Berg later earned a master’s degree in economics at North Dakota State University in 1982. He worked at General Mills, merchandising grain and ingredients. On July 7, 1987 he started at American Crystal as “manager of economic research,” and was responsible for forecasting the price of sugar.

Appropriate ego

In his time at American Crystal, Berg worked under several presidents, and learned something from each of them.

Ron Hayes, president from 1986 to 1990, kept a two-brimmed ball cap in his office as a tactile reminder to board directors that one brim was for the board position and the other for their farmer role.

In 1992, the flamboyant “Hurricane Joe” Famalette took over as CEO. Famalette was charismatic and the consummate wordsmith. Famalette negotiated the formation of United Sugars Corp., a cooperative that markets sugar for Crystal and two other cooperatives. He helped form ProGold LLC plant in Wahpeton, N.D., a high-fructose corn sweetener plant that has been largely leased to Cargill Inc., since it began.

Famalette “inflated our ego to a level that was appropriate to the size and impact that we had for the domestic sugar market,” Berg says. Among other things, Famalette set a vision of the cooperative increasing to a half-million acres. “I wish I could have thrown a rope over him and slowed him down; I tried to,” Berg says.

In 1996, Dan McCarty became president and CEO. McCarty encouraged Berg to go through operations roles, including the Moorhead factory district, and the packaging department. At that time, American Crystal expanded its marketing partnership by adding a cane factory - United States Sugar Corp., a cooperative based at Clewiston, Fla. The marketing partnership keeps American Crystal in touch with the cane industry, and offers geographic diversity.

In 1998, James Horvath became CEO, and made Berg vice president of administration. Berg led labor negotiations for contracts in 1999 and 2004, served in several vice presidential roles, and was named president and CEO in 2007.

Biggest threats

Berg has seen his share of industry challenges.

In the 2000s, the sugar industry grappled with overproduction. The company forfeited sugar to the government in 2000 and 2001. In the 2002 farm bill, Horvath and CEO Joe Talley were instrumental in shaping a new marketing allotment system for U.S. sugar processors, which restored balance to the industry. That same year, Crystal purchased the sugar beet factories in Sidney, Mont., Torrington, Wyo., and Hereford, Texas. Hereford remained closed. They leased out Torrington to Great Western Sugar Co., and they kept Sidney as Sidney Sugars Inc., a wholly owned subsidiary.

In 2002, Crystal hit a record-high 519,000 acres of sugar beets, which involved late-planting and overplanting issues.

Later, Mexican sugar imports posed a major threat. In 1994, President Bill Clinton signed the North American Free Trade Agreement. NAFTA expanded trade links between Canada and the U.S. to include Mexico. Trade barriers were expected to come down among the three countries over time.

By the late 2000s, U.S. producers alleged Mexico was subsidizing its sugar production and dumping excess sugar into the U.S. market at below their cost of production. American Crystal and other companies had to gather data to prove to the International Trade Commission the trade was illegal.

Meanwhile, Berg and his board members decided a new labor contract would need changes for the company to remain competitive in future years. The new contract would need more aggressive drug testing and would need to make health care cost changes in line with benefits paid by other businesses. The company wanted to compensate process technicians and other workers for broadening their skills - demonstrating that through testing and not only through seniority. The company offered a pay increase to compensate, but the union found it insufficient.

On Aug. 1, 2011, the company locked out employees. The company operated with supervisors and replacement workers, until a new deal was accepted and workers returned to work in May 2013, after 22 wrenching months. “Nothing about that was fun,” Berg says.

The current contract expires Aug. 1, 2017, and must be renegotiated.

Many opponents

The Sweetener Users Group - some of the nation’s largest candy makers and customers for American Crystal - perennially have worked to gut the sugar program, which uses commodity loans and market allotments to protect the U.S. industry from foreign sugar that is government subsidized.

Sugar producers, meanwhile, have successfully argued the U.S. sugar industry should have a domestic supply of sugar. Beet processors in the north have the natural advantage of cold temperatures for storing the beets, but Berg adds the factories must “run every year, whether price is good or not” so they need the farm program for stability.

He says Brazil subsidizes its cane industry at $2 billion a year, supporting both sugar and ethanol. Brazil produces 50 million tons of sugar a year, exporting more than half of it. Today, the world market is about 19 cents per pound. And if the U.S. sugar industry failed because of cheap imports, the imports would likely increase in price. If the U.S. took away its import protections, Berg thinks the Brazil government would likely stop subsidizing but would eventually raise sugar prices that American consumers must pay.

Consumers are also making up their minds about whether to accept genetically modified crops. Consumers eat significant amounts of GMO corn and soybeans, without any demonstrated ill effects, but many voices in the public discourse - some with significant financial stakes in creating fear - have been successful at doing just that.

Sugar is trying to work with corn, soybean and canola - whose industries also have exposure to anti-GMO consumer sentiments - to join in a consumer education effort. A recent, proprietary report conducted by American Crystal indicates the concern is widespread, and not limited to those who can afford organic products.

Rolling up a hill

“There’s nothing wrong with GMO, but I think people think there’s nothing right either, that says why I want to buy this,” Berg says. “In the data we got, the majority of American consumers said, ‘I’m not sure why I should buy them.’”

Farmers have a big job convincing consumers that GMOs are perfectly safe, good for the environment, that it’s more efficient farming to feed a hungry world population. “It’s a great, big boulder roll up a hill, information-wise, to get people off this GMO concern,” Berg says. “It’s kind of amorphous.”

Some farmers have indicated they don’t want to farm without the simpler Roundup Ready version of production. Younger farmers don’t have experience in tank-mixing herbicides to control weeds like it was done in the 1990s. Some have speculated taking away the technology would cut sugar beet acreage per grower, as management would need to rise. Berg thinks sugar is here to stay.

“If you look at $3.25 corn and $9 soybeans at the elevator, do you want to give up sugar beets completely?” Berg says. “They said no. Long-term, their investment in this company, and our ability to keep the sugar program viable, means they have a financial foundation for their farm they can work with that allows them to stay in those other crops, and when the prices get better they can make money there, too.”

Berg says he’s looking forward to getting off the merry-go-round of sugar industry concerns. He and his wife, Becky, have three grown children - Andrew, Charlie and Kathryn. They will keep a Minnesota lake home and their home in Arizona, but also something in the Fargo-Moorhead area. Among his immediate retirement activities will be attending several national sporting events.

MOORHEAD, Minn. - His mantra is “sugar is sunshine” but that’s just how he likes to communicate the goodness of sugar to consumers and legislators.

David Berg, 62, will attend his last board meeting on Aug. 24 as CEO of American Crystal Sugar Co. He served almost nine years in that position, and a total of 29 years with the company.

Tom Astrup, who became American Crystal’s president in March 2016, will become CEO at the end of August.

Berg managed one of the nation’s largest and most successful examples of a closed cooperative, owned by 2,800 farmer-shareholders. Crystal is the largest player in a sugar industry that puts $4.9 billion into the region’s economy and is unrivaled for political influence among ag groups.

Despite its economic importance, Berg says agriculture, and the beet industry in particular, often fades into the background. “We don’t have ‘A Million Cups’ every week to talk about agriculture, like they talk about new technology,” he says. It’s just not that glamorous.”

Into the story Berg grew up in Moorhead, Minn., and earned a mass communications and broadcast degree, and an economics minor from Minnesota State University-

Moorhead in 1978. He worked for two years as a television reporter for WDAY TV in Fargo, N.D., and in 1978 was awakened to agriculture’s complexity when he was interviewing the legendary Al Bloomquist, the statesmanlike vice president of governmental affairs, and later the president, for American Crystal. Berg heard Coca Cola was moving away from using sugar in products and were instead choosing high-fructose corn sweetener, and he wondered how the change would affect American Crystal.

“Al was a calm, seasoned person,” Berg remembers, and Bloomquist knew how the sugar program could adjust to move the sugar somewhere else. Bloomquist encouraged farmers to buy the company from its corporate owners and make it a closed farmer-owned cooperative.

Berg later earned a master’s degree in economics at North Dakota State University in 1982. He worked at General Mills, merchandising grain and ingredients. On July 7, 1987 he started at American Crystal as “manager of economic research,” and was responsible for forecasting the price of sugar.

Appropriate ego In his time at American Crystal, Berg worked under several presidents, and learned something from each of them.

Ron Hayes, president from 1986 to 1990, kept a two-brimmed ball cap in his office as a tactile reminder to board directors that one brim was for the board position and the other for their farmer role.

In 1992, the flamboyant “Hurricane Joe” Famalette took over as CEO. Famalette was charismatic and the consummate wordsmith. Famalette negotiated the formation of United Sugars Corp., a cooperative that markets sugar for Crystal and two other cooperatives. He helped form ProGold LLC plant in Wahpeton, N.D., a high-fructose corn sweetener plant that has been largely leased to Cargill Inc., since it began.

Famalette “inflated our ego to a level that was appropriate to the size and impact that we had for the domestic sugar market,” Berg says. Among other things, Famalette set a vision of the cooperative increasing to a half-million acres. “I wish I could have thrown a rope over him and slowed him down; I tried to,” Berg says.

In 1996, Dan McCarty became president and CEO. McCarty encouraged Berg to go through operations roles, including the Moorhead factory district, and the packaging department. At that time, American Crystal expanded its marketing partnership by adding a cane factory - United States Sugar Corp., a cooperative based at Clewiston, Fla. The marketing partnership keeps American Crystal in touch with the cane industry, and offers geographic diversity.

In 1998, James Horvath became CEO, and made Berg vice president of administration. Berg led labor negotiations for contracts in 1999 and 2004, served in several vice presidential roles, and was named president and CEO in 2007.

Biggest threats Berg has seen his share of industry challenges.

In the 2000s, the sugar industry grappled with overproduction. The company forfeited sugar to the government in 2000 and 2001. In the 2002 farm bill, Horvath and CEO Joe Talley were instrumental in shaping a new marketing allotment system for U.S. sugar processors, which restored balance to the industry. That same year, Crystal purchased the sugar beet factories in Sidney, Mont., Torrington, Wyo., and Hereford, Texas. Hereford remained closed. They leased out Torrington to Great Western Sugar Co., and they kept Sidney as Sidney Sugars Inc., a wholly owned subsidiary.

In 2002, Crystal hit a record-high 519,000 acres of sugar beets, which involved late-planting and overplanting issues.

Later, Mexican sugar imports posed a major threat. In 1994, President Bill Clinton signed the North American Free Trade Agreement. NAFTA expanded trade links between Canada and the U.S. to include Mexico. Trade barriers were expected to come down among the three countries over time.

By the late 2000s, U.S. producers alleged Mexico was subsidizing its sugar production and dumping excess sugar into the U.S. market at below their cost of production. American Crystal and other companies had to gather data to prove to the International Trade Commission the trade was illegal.

Meanwhile, Berg and his board members decided a new labor contract would need changes for the company to remain competitive in future years. The new contract would need more aggressive drug testing and would need to make health care cost changes in line with benefits paid by other businesses. The company wanted to compensate process technicians and other workers for broadening their skills - demonstrating that through testing and not only through seniority. The company offered a pay increase to compensate, but the union found it insufficient.

On Aug. 1, 2011, the company locked out employees. The company operated with supervisors and replacement workers, until a new deal was accepted and workers returned to work in May 2013, after 22 wrenching months. “Nothing about that was fun,” Berg says.

The current contract expires Aug. 1, 2017, and must be renegotiated.

Many opponents The Sweetener Users Group - some of the nation’s largest candy makers and customers for American Crystal - perennially have worked to gut the sugar program, which uses commodity loans and market allotments to protect the U.S. industry from foreign sugar that is government subsidized.

Sugar producers, meanwhile, have successfully argued the U.S. sugar industry should have a domestic supply of sugar. Beet processors in the north have the natural advantage of cold temperatures for storing the beets, but Berg adds the factories must “run every year, whether price is good or not” so they need the farm program for stability.

He says Brazil subsidizes its cane industry at $2 billion a year, supporting both sugar and ethanol. Brazil produces 50 million tons of sugar a year, exporting more than half of it. Today, the world market is about 19 cents per pound. And if the U.S. sugar industry failed because of cheap imports, the imports would likely increase in price. If the U.S. took away its import protections, Berg thinks the Brazil government would likely stop subsidizing but would eventually raise sugar prices that American consumers must pay.

Consumers are also making up their minds about whether to accept genetically modified crops. Consumers eat significant amounts of GMO corn and soybeans, without any demonstrated ill effects, but many voices in the public discourse - some with significant financial stakes in creating fear - have been successful at doing just that.

Sugar is trying to work with corn, soybean and canola - whose industries also have exposure to anti-GMO consumer sentiments - to join in a consumer education effort. A recent, proprietary report conducted by American Crystal indicates the concern is widespread, and not limited to those who can afford organic products.

Rolling up a hill “There’s nothing wrong with GMO, but I think people think there’s nothing right either, that says why I want to buy this,” Berg says. “In the data we got, the majority of American consumers said, ‘I’m not sure why I should buy them.’”

Farmers have a big job convincing consumers that GMOs are perfectly safe, good for the environment, that it’s more efficient farming to feed a hungry world population. “It’s a great, big boulder roll up a hill, information-wise, to get people off this GMO concern,” Berg says. “It’s kind of amorphous.”

Some farmers have indicated they don’t want to farm without the simpler Roundup Ready version of production. Younger farmers don’t have experience in tank-mixing herbicides to control weeds like it was done in the 1990s. Some have speculated taking away the technology would cut sugar beet acreage per grower, as management would need to rise. Berg thinks sugar is here to stay.

“If you look at $3.25 corn and $9 soybeans at the elevator, do you want to give up sugar beets completely?” Berg says. “They said no. Long-term, their investment in this company, and our ability to keep the sugar program viable, means they have a financial foundation for their farm they can work with that allows them to stay in those other crops, and when the prices get better they can make money there, too.”

Berg says he’s looking forward to getting off the merry-go-round of sugar industry concerns. He and his wife, Becky, have three grown children - Andrew, Charlie and Kathryn. They will keep a Minnesota lake home and their home in Arizona, but also something in the Fargo-Moorhead area. Among his immediate retirement activities will be attending several national sporting events.