Story Whitney Phillips
Greeley, Colo.

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November 27, 2013
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Sugar still struggling: This year’s record-high beet yields won’t bring record incomes

Record-high sugar beet yields this year in Colorado don’t mean record-high profits for growers, after sugar prices fell sharply during the past year, amid an oversaturated market, and have yet to recover.

Jerry Darnell — agricultural manager for the Denver-based Western Sugar Cooperative, which works with farmers in Colorado, Nebraska, Wyoming and Montana — said Colorado’s average yield for sugar beets this year was 33.5 tons per acre, easily surpassing the state’s record of 31.8, set last year. Sugar content, though, was below average at 14.9 percent, likely due to the overabundance of moisture in September and October.

Growers in Weld County, Colo., who produce about 35 percent of Colorado’s sugar beets, said their crops were right in line with the record-yield numbers, giving some local growers the best crops they’ve ever seen.

But the severe drop in sugar prices, which has stabilized recently but not recovered, leaves many of them looking for ways to make up for lost revenue.

“It’s gonna be a tight year,” Darnell said. “The last three years we’ve had really good sugar prices, and growers made money. Now, we’re back to where prices are falling, and we’re at break even.”

Growers say the past few years they’ve enjoyed high yields, thanks to resilient seeds, and high prices, because of less product in the U.S.

But a surplus of sugar flooded the market, causing prices to fall during the past year.

Growers don’t see the prices shooting back up any time soon, they say, so they’re settling in to face depleted revenue.

“I think we’re better able to weather the storm in the next two to three years than we would have been without those recent profitable times we’ve experienced the last three to five (years),” said Marc Arnusch, who grows sugar beets, corn, wheat, sunflowers and alfalfa in the southeast corner of Weld county.

Arnusch noted that sugar beet prices fell from $54 per ton last year to about $35 per ton this year.

While farmers otherwise raise or lower production of a certain crop, depending on the state of the market, sugar beet growers with the Western Sugar Cooperative don’t have that luxury, as the organization’s board allocates production amounts. Most farmers who grow sugar beets in Colorado and in parts of Nebraska, Wyoming and Montana have contracts with Western Sugar to grow a certain amount of beets each year.

Many point to the USDA’s sugar policy as a major contributor to the overabundance of sugar imports that caused prices to drop.

“It has a lot to do with the policies of the USDA and the fact that I think an excess amount of cain sugar was allowed to be imported in this country to impact the supply and demand,” said Artie Elmquist, who farms in southwest Weld.

Arnusch said he believes trouble for the industry started when the federal government stepped in to the zero-cost sugar industry to try to improve it and wound up making the market more unstable.

“The (USDA’s) sugar policy is one where I don’t think the government understood it could decimate a 98-percent-farmer-owned sugar industry,” Arnusch said. “At the end of the day, the consumer hasn’t saved a dime, but we’ve put an immense amount of pressure that wasn’t necessary.”

In accordance with federal law, the USDA has worked to remedy the oversaturated market, offering to purchase sugar from domestic sugarcane or sugar beet processors and subsequently conduct voluntary exchanges for credits under the Refined Sugar Re-export Program. Some of that sugar has been purchased by ethanol producers after sugar processors forfeited product to pay off government loans.

“It remains to be seen, longer term, whether that can bring the supply level down to a point that we can anticipate a better balance,” Elmquist said.

Local growers say they’re hoping to see more reform come to the federal policy regarding sugar, perhaps in the form of the proposed farm bill.

Essentially, they say they’d like to see the government help more by doing less in the market.

“I think we’re going to have to ride this one out for a while,” Arnusch said. “We’ve all seen how slowly things happen in Washington.”

Until farmers see major changes in how the government imports sugar, they say they’re doing what they can to make up for dwindling prices.

Weld County Commissioner Doug Rademacher, who farms corn, hay, wheat and sugar beets near Mead and Firestone, said he’s free to adjust other crops, and is putting more stock in wheat, which is selling at a good price, and investing less in corn, which isn’t faring well at the moment.

“We just have to adjust like we have been,” Rademacher said. “(Sugar beets are) the only crop we’re contracted to grow.”

Elmquist said as sugar prices go down, input costs to grown sugar beets stays the same, so farmers have to look at ways to operate more efficiently. For his operation ­— which produces sugar beets as well as alfalfa, hay, barley for Coors and corn — Elmquist said his focus is on working toward a no-till process, which he says cuts costs of labor, fuel and machinery expenses without damaging the nutrients in the soil.

“What we need to do now is manage our expenses better with the lower crop prices,” he said.

While sugar beet prices are a concern for farmers, they say they’re likely to stick with the crop, as it’s been historically one of the more reliable crops.

“If you really analyze it, it’s probably the beets that have been the most stable of the row crops,” Elmquist said.

Growers say lulls in prices are part of the deal when you sign up for agriculture, and the key to success is keeping bad years in mind while enjoying the good ones.

“I think we’ve tightened our belts well, and we’ve managed ourselves well, and as an industry we will get through this, no doubt,” Arnusch said. ❖


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The Fence Post Updated Nov 29, 2013 09:27AM Published Dec 13, 2013 03:58PM Copyright 2013 The Fence Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.