CLEWISTON, Fla. — A refinery acquisition by a Florida cane sugar company will help its partners — Red River Valley beet growers — become stronger competitors, according to officials of the companies familiar with the deal.
United States Sugar Corp. (“U.S. Sugar”) of Clewiston, Fla., announced March 24, 2021, that it will purchase the iconic Imperial Sugar Co. The deal includes its port refinery at the city of Port Wentworth, Ga., and its sugar transfer and liquefaction facility at Ludlow, Ky., near Cincinnati.
Louis Dreyfus Co., a Netherlands company, bought Imperial in 2012. LDC emphasized the sale “does not impact our broader sugar merchandizing business, to which we remain fully committed,” said Enricho Biancheri, global head of LDC’s Sugar Platform, which is one of the five top merchandiser worldwide.
But it could have significant impacts for farmer-owned partners in North Dakota and Minnesota.
U.S. Sugar is a partner in United Sugars Cooperative of Edina, Minn., the marketing cooperative that includes American Crystal Sugar Co. of Moorhead, Minn., Minn-Dak Farmers Cooperative of Wahpeton, N.D., and others. United Sugars has about 40 employees based in Moorhead.
Matt Wineinger, United Sugars president and CEO, said that prior to this deal, the marketing group typically supplied just over 25% of the U.S. market. If the deal goes through as planned, United Sugars could supply 32% to 34% of the U.S. market. U.S. Sugar expects to complete the deal this year, pending government approval.
Co-op marketer
Because of the size of the deal, the U.S. Justice Department is reviewing it for compliance with the Hart-Scott-Rodino Antitrust Improvement Act.
(One competitor, American Sugar Refining Inc., with brands Domino and C&H brands, currently controls about 32% to 35% of the U.S. market, according to industry estimates. ASR acquired California & Hawaiian Sugar Refining Co., Crockett, Ca., in 2006.)
Terms of the deal were not disclosed. Press releases said it is being financed by Wells Fargo Bank, N.A., and PGIM Agricultural Finance.
Wineinger said the deal wouldn’t give anyone “pricing leverage” in the marketplace.
Robert H. Buker Jr., U.S. Sugar’s president and CEO, said the Imperial Sugar “port refinery, consumer brands and sugar processing capabilities” are all part of the deal and will provide its customers with a “more dependable, secure” supply of sugar.
Moving forward, United Sugars will use the Imperial brands, which are strongest in across the South and into the Midwest. The marketer also will continue to use the Crystal Sugar brand, which is particularly strong in the Midwest.
Buker has worked “elbow-to-elbow from day-one” with United Sugars co-op executives and has kept its partners informed of the deal’s progress weekly, Wineinger said.
Mike Gorrell, Imperial Sugar’s CEO, said his company “primarily sources its raw sugar from Central and South America and the Caribbean.” Louis Dreyfus Co. was founded in France in 1851, with world headquarters based in the Netherlands. It is a world merchant and processor of agricultural goods. LDC purchased Imperial in 2012.
Weather-proofing
In 1994, three Minnesota and North Dakota sugarbeet cooperatives started United Sugars Inc. American Crystal, Minn-Dak Farmers Cooperative and Southern Minnesota Beet Sugar Cooperative of Renville, Minn., originally were in the group. Southern Minnesota Beet Sugar dropped out.
In 1998, the U.S. Sugar cane company joined, adding the cane production. In 2018, Wyoming Sugar Cooperative of Worland, Wyo., came on board.
United Sugars is unique among sugar marketers because it markets sugar from both U.S. cane and beet producers. Cane and beet sugar is indistinguishable in crystalline form.
Wineinger said American Crystal supplies “more than 50%” of United Sugars’ volume in a typical year, while Minn-Dak Farmers supplies roughly 10%, U.S. Sugar, 33%, and Wyoming Sugar 2%. There are nine plants under the current configuration, which would go to 10 plants with the Imperial acquisition.
Its primary owners are employees and a charity set up by founder Charles Stewart Mott. Besides sugar, it owns and operates a short-line railroad, South Central Florida Express, which ships those products. It also grows sweet corn, citrus, green beans and other fresh produce.
Wineinger said U. S. Sugar's increased production capacity and access to the Savannah port refinery will be good for domestic sugar supply security and logistics. This could “supplement” the United Sugars’ supply, if necessary, Wineinger acknowledged, in the case of a hurricane or freeze, as occurred in the Red River Valley in 2019. If the company comes up short on domestic production, it could acquire raw sugar on a world market.
‘Suite’ of sweets
The U.S. Sugar acquisition allows U.S. Sugar and United Sugars to offer a “full suite” of sugar products. U.S. Sugar will be able to “compete across the U.S. with both domestic and imported sugar refiners, along with independent and resellers and distributors.”
For decades, U.S. Sugar sold and shipped raw sugar to the Imperial refinery in Savannah that it is now acquiring. In 1988, U.S. Sugar built its own consolidated, automated milling and refining facility, making it the “world’s largest integrated sugarcane and refining operation.”
In 2006, they began a “debottlenecking” process in its Clewiston refinery, effectively increasing its capacity. U.S. Sugar emphasizes that it “sustainably farms” more than 200,000 acres of sugar cane in south Florida. U.S. Sugar said it will invest in the Savannah refinery to expand production and reduce costs. Those investments will be similar to investments it made to its own refinery in 2006.
It will add enough refining capacity to “utilize all of the sugarcane” their Florida farmers raise. Currently, the company sends some sugar cane to three outside Florida “raw mills,” which then send raw sugar to competing refiners. Those raw mill relationships will continue, but some of the raw sugar will be sent to Savannah.
U.S. Sugar doesn’t “anticipate” the Imperial acquisition will lead to any facility closing or “major employment impacts.”
Wineinger said the deal will mean “significant freight savings synergies that will be shared with customers.” Significantly, it will add brown and powdered sugar from cane sugar, which will complement but not replace the beet sugar products it already gets from American Crystal in Moorhead, Minn.
Imperial was founded in 1843 in Sugar Land, Texas, and acquired Holly Sugar of Colorado Springs. Imperial filed Chapter 11 bankruptcy in 2001, and sold assets. American Crystal Sugar in 2003 bought a Holly plant at Sidney, Mont. Today that operates as an American Crystal Sugar subsidiary, Sidney Sugars Inc.
The Imperial plant at Port Wentworth, Ga., had a dust explosion Feb. 7, 2008, which killed 14 people and injured 40. It was refurbished and reopened 21 months later, in July 2009.
