Co-op's president says sugar content lower but yield higher

FARGO, N.D. - Minn-Dak Farmers Cooperative of Wahpeton, N.D., says its 2004 crop results will be OK, but won't match the pay-out from the 2003 crop, which totaled a whopping $102 million.

David Roche, Minn-Dak's president, is calling the level "a new standard." Roche addressed a news conference before the cooperative's annual meeting last week in Fargo, N.D. The 2003 crop produced net revenues of $198.9 million. Sugar content for 2003 was an excellent 18.7 percent, well above the five-year average.

That, combined with a 2.1 million ton slice, was the second-largest volume in company history. The co-op also produced the highest per-ton payment in history, at $45.08 last year.

The outlook for the 2004 crop isn't as good - roughly $35 to $36 per ton. The 2004 crop has a lower sugar content, at 16.7 percent, but the yield is higher at 23 tons, even with 5,000 acres left unharvested in sodden fields to the south.

"This year's payment will be down on a per-acre basis about 10 (percent) to 12 percent," Roche says.

Promotion program

Roche says Minn-Dak will work with four other companies, including American Crystal Sugar Co. of Moorhead, Minn., to help finance a promotion program for sugar through The Sugar Association. Andrew C. Briscoe III, president and chief executive officer of The Sugar Association, based in Washington, says from 1986 to 1995, the industry invested $5 million a year in a generic sugar campaign.

"We were able to increase sugar consumption by 19 percent over that period of time," Briscoe says. "Our objective is to do the same. After nine years of a sabbatical from advertising, we're going to promote the benefits of real sugar - all-natural, 15 calories per teaspoon."

It's time to re-educate the public, Briscoe says. Most Americans polled by Gallup believe there are 76 calories in a tablespoon of sugar. Briscoe says the companies have committed $3.5 million per year to the project.

"Our goal is to get to $8 million to $9 million," he says. The campaign is set for three years and could go beyond that.

Minn-Dak will pay about 10 percent of that, or about $1 million, during the next three years, Roche says.

In the spring, the group plans to roll out the project in a test market, and further through the year. The group will be "targeted toward key markets of those that are participating," Briscoe says. Many users of artificial sweeteners are somehow "natural," Briscoe says.

In that connection, Briscoe says, The Sugar Association soon will start a campaign involving a new product called Splenda.

"We are going to work hard to educate consumers that the final product does not have sugar in it. The final product is not natural. In fact, it's a chlorinated artificial sweetener. The final product is actually made with chlorine."

The Food and Drug Administration has approved Splenda as safe, based on animal studies, but Briscoe says there are "no long-term health studies on human beings." Briscoe says it's important to remember, though, that the entire artificial sweetener market is less than $400 million while the sugar industry is $4.5 billion to $5 billion.

Roche says the low-carbohydrate diet trend has proven to be a radical fad.

Briscoe says about 12 percent of the U.S. population was involved in those diets, in the past two years, but that has now declined to about 5 percent.

Speakers

Among the speakers at the meeting:

• Outgoing board chairman Victor Krabbenhoft, Moorhead, Minn., who had served his maximum of 15 years.

  "Over the years, the string has been getting tighter and tighter around our necks," Krabbenhoft says. He says American trade policy needs to be awaken to the value of a reliable, safe domestic supply of sugar in an era of international terror.

• Jack Roney, director of economic policy analysis for the American Sugar Alliance.

  "Beet sugar producers here are the most efficient beet producers in the entire world," Roney says. Yields have increased 90 percent over 20 years. "If we had global free trade in sugar, we could compete because our costs are below the world average."

  U.S. retail sugar prices are 22 percent below the average of other developed countries. Roney says the world average cost of producing sugar is about 16 to 18 cents per pound of raw cane sugar. That's just about the U.S. market price, meaning "it's a constant struggle to survive."

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