Speakers discuss farm policy, industry challenges at sugar producers' annual meeting

FARGO, N.D. - American Crystal Sugar Co.'s annual meeting painted a mixed picture of success and long-range concerns. The cooperative's annual meeting again was held in conjunction with the Red River Valley Sugarbeet Growers annual meeting at the Holiday Inn in Fargo, N.D.

On the up side, the payment projection for the 2005 crop is forecast up to $40.50 per average ton, based on 8.9 million tons delivered. That's a $360.5 million gross payment, up from last year's $351.9 million. Crystal's board adjusts its projected payments in late March when the processing campaign is closer to finished.

Crystal President James Horvath noted that farmers in areas of excessive moisture especially those in the Drayton, N.D., district who lost 32,000 acres. The best of the crops were in the Hillsboro, N.D., and Moorhead and Crookston, Minn., areas.

Also on the positive side are increased consumer demand and a promotion campaign timed to take advantage of it. The campaign ran in test markets in Portland and the Upper Midwest, run through the The Sugar Association.

On the down side are ongoing worries about trade policy and the political future of sugar.

Farm policy talk

Speakers at the meeting included a parade of politicians. Sen. Kent Conrad, D-N.D., and Rep. Collin Peterson, D-Minn., led the lineup of heavy hitters on the agricultural policy, but it was a back-bencher Rep. Gil Gutknecht, a Republican from the 1st District in Minnesota, who was notable.

"I think you need to see a Republican once in a while," Gutknecht said, complimenting the industry for its "amazing" impact on the region's economy. "The sugar beet industry is incredibly important, not only to the Red River Valley, but to the state of Minnesota and, ultimately, to the American economy," Gutknecht said. "I'm here, in part, to just congratulate all the growers, and the truth is they don't ask for much from the federal government."

Gutknecht said he has to remind fellow members of the House Budget Committee "on many occasions" that the sugar titles requires a "no net cost" to the taxpayers.

"Essentially, all we do, which is what we do for a number of industries, including the dairy industry, is that we put some import quotas," Gutknecht said.

Gutknecht said that as the sugar industry looks toward future trade agreements and the farm bill, "I want to let them know now, that if you look at the pressure we're going to get from our trade partners and competitors, and on the budget side, I think it's hard to predict that the next farm bill will be as generous as it is today. I think we have to all work together. I think we need to get the sugar beet growers and others back into the camp. We've got to make sure our story your story gets told."

Gutknecht attracted numerous kudos from speakers at the meeting, for bucking his party leadership by voting against the Central American Free Trade Agreement, which sugar producers strongly opposed as a precedent for undermining the U.S. industry. Gutknecht's district includes pork producers who had supported CAFTA and no sugar acres, but he voted against the agreement anyway.

Peterson talked about the tough fight ahead to deal with the trade talks and the farm bill. He said that with ethics problems surfacing in the Republican House, it is conceivable he'd ascend to the chairmanship of the House Agriculture Committee, he'd shift farm crops into more biofuels production.

"I'm kind hoping there'll be some turmoil, and maybe we'll end up being in charge and then I could be the chairman of the ag committee," Peterson says. "And I'll guarantee you something I'm a ranking (minority) member and they can't pass a farm bill without me, so I've got a pretty good spot but if I'm chairman, I'll guarantee you either way that sugar is going to be OK in the next farm bill."

Rep. Earl Pomeroy, D-N.D., also a member of the agriculture committee, said he's been alarmed by how easily Republican members of the committee have pushed through budget cuts for agriculture, regardless of their policy impacts.

Industry challenges

For his part, Conrad said Brazil is the "biggest challenge" for the industry. It is the world's No. 1 exporter of sugar, soybeans, beef and other crops. It has 200 million acres in production and could add add 350 million more. It exported 1.5 million metric tons of sugar in 1990 and exports 14 million tons today, Conrad said.

"Brazil has single-handedly driven the global dump price market price of sugar to record low territory," Conrad said, adding that the administration has done little to counter that.

Horvath reported a reduction in revenues because of increased energy costs diesel for trucking beets (also an increased cost for growers) coal and natural gas.

"Energy has now surpassed labor as our largest cost element and the increasd costs are materially negatively affecting profitability of our shareholders," Horvath said. "Meanwhile, total debt and debt-to-equity ratio were reduced last year, and we are forecasting that they will move lower again this year," Horvath says.

David Kragnes, 53, Kragnes, Minn., was voted chairman of the board at the board's reorganization meeting after the annual meeting. Kragnes replaced Terry Stadstad, Grand Forks, who had served one year as chairman. The new vice chairman is Michael Astrup, 52, of Dilworth, Minn.

Newly elected to the board were John Brainard of Ada, Minn.; Brian Erickson of East Grand Forks, Minn.; and Robert Green of St. Thomas, N.D. Outgoing board members are Patrick Mahar of Cavalier, N.D.; Jerry Bitker of Halstad, Minn.; and Stadstad.

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