ISSUE #379

379 - New Pre-pile Payment System Could Generate Over $4 Million in Profits

4-4-2000

A close look at the current pre-pile payment system shows that it doesn't provide an incentive to deliver the maximum sugar content possible during pre-pile harvest. The quality of pre-pile harvest beets is essentially disregarded in the present payment system. Estimates are that the value of the sugarbeets delivered during this period could be increased by over $4 million. For that reason, the Board of Director’s has voted to change the pre-pile payment system to provide an incentive for quality.

The new payment system has three objectives:

  1. Encourage shareholders to deliver the highest sugar content that is possible.
  2. Provide an adequate premium to ensure that sugarbeets are delivered during pre-pile harvest.
  3. Fairly distribute the premium being paid among all shareholders.

The new system de-couples the payment for sugarbeets delivered during pre-pile harvest from the payment for sugarbeets delivered during the stockpile period. This is a fundamental change in the calculation method.

The payment for sugarbeets delivered in pre-pile harvest will be comprised of two parts. First, the base payment will be calculated in the same manner as it is for sugarbeets delivered during the stockpile period. A premium will then be added to that amount, and the total will represent the payment for sugarbeets delivered during the pre-pile harvest period.

The premium for each day will be based on the average growth in sugar content per day. After the pre-pile harvest is complete each year, the RRV average daily sugar growth will be calculated based on samples taken during pre-pile harvest deliveries.

This average daily sugar growth will be used with the current system’s formula, which has an assumed average daily tonnage growth built in to it, to determine the premium for each individual day prior to stock pile. All shareholders delivering on the same day during pre-pile harvest will receive the same premium percentage.

The following chart shows how the payment for sugarbeets delivered during the pre-pile harvest period would be increased by the premium. As you can see, the premium amount increases based on the length of time between the pre-pile harvest delivery date and the date stockpiling begins. For example, sugarbeets delivered 20 days before stockpiling begins would receive a premium of 62.3% over the payment that would be calculated using our regular payment system. This chart is based on an average sugar growth rate for the last five years and is meant as an example only. The 2000 crop year premiums will be based on the actual average growth rate for sugar during the pre-pile harvest period for the 2000 crop.

379.1

An example of how the payment for sugarbeets delivered during the pre-pile harvest period would be determined is as follows. For this example we will assume that the regular payment for beets having a sugar content of 17.5% sugar would be forecasted to have a $35 per ton payment. You deliver beets 14 days prior to the beginning of stockpile and the sugar content is 16%. Based on the actual sugar content of those sugarbeets, and the forecasted beet payment, those sugarbeets would generate a base payment of $28 per ton. Now, according to the chart above, since those sugarbeets were delivered 14 days before stockpiling started, the total payment would also include a premium of 39.5%, which is another $11 per ton. Therefore, the total payment for the sugarbeets delivered on that day would be $39 per ton.

This new system will be used for the 2000 crop, so you may want to plan accordingly. The following are potential strategies for succeeding with the new system:

  • Don’t plant the headlands to beets.
  • Reduce N fertilizer use or don't apply any on headlands.
  • Use high sugar type varieties in areas harvested during pre-pile harvest.
  • Plant more seed on the headlands to raise these normally lower populations.
  • Scalp instead of flail during pre-pile harvest to remove low quality crown growth.
  • Manage strikeout areas for early harvest with some of these same practices.
  • Harvest the fields with the lowest growth potential first.

379.2

This table  is based on average sugar growth rates, and payment statistics for the last five years and is meant as an example only.

The 2000 crop year premiums will be based on the actual average growth rate and the payment statistics from the 2000 crop. If you have questions concerning this new system, please ask your agriculturist, or call Brian Ingulsrud at (218) 236-4383.