Wyoming Business Council grants Wyoming Sugar Co. $5.6 million relief loan
March 31, 2017
Wyoming sugar beet producers and processers had a lot to deal with from mother nature this past fall. Late rain accompanied by multiple freezes gave way to difficult harvesting and processing conditions for the Wyoming Sugar Co. and its members in Worland, Wyo. As a result, Wyoming Sugar estimated losses of about $5.7 million.
Their troubles started last fall.
Sugar beets in Wyoming are harvested in early September through November just as temperatures are dropping. This year, the fall also brought bountiful rain to add to the mix of the beet harvest.
"The heavy rains at the start of the harvest led to muddy beets," said Mike Greear, president and CEO of Wyoming Sugar. "We were able to process these beets but it was a bit slower than normal."
“The heavy rains at the start of the harvest led to muddy beets. We were able to process these beets but it was a bit slower than normal.” Mike GreearPresident and CEO of Wyoming Sugar
On Dec. 19, Wyoming temperatures dropped to a frigid minus 10 degrees Fahrenheit for three consecutive days. The knives used in the sugar beet facility are still able to slice through frozen beets but this starts to take a toll on the equipment and led to the need for changing these blades out more frequently than usual.
"It is a continuous process so when we started having trouble on the beet end it carried through to the sugar end," Greer said. "Those problems persisted until the weather warmed up again."
Before the beets move through the process they are held in a hopper until they can be sliced. The need to change out the blades at an accelerated rate led to the beets freezing inside the hopper, he said.
"This required the whole process to shut down and we had to manually move out the beets so we could start up the beet end again," Greear said. "In the meantime, we were loosing what we call the juice that went through the rest of the process."
For any type of business, time is money. By shutting down the processing to change the knives, not only did they loose time but they also lost quality. Greear said the extraction rates went down significantly because of the stop and go flow of this year's processing.
"Wyoming Sugar is a very small company," Greear said. "We had 10,200 acres under contract last year. We did have record tonnage for the year. The crop was fine it was the harvest conditions that were difficult to say the least."
Mother nature had more in store for the town of Worland as the eventual rise in temperatures led to ice jams and flooding along the Big Horn river. The flooding came within a foot of the sugar company's facility but luckily that was where the water stopped, Greer added.
"We have growers in Washakie, Fremont, Big Horn and Park counties," Greear said. "It is one of the few value-added manufacturing processes in the state of Wyoming. That value-added gets pushed back down to our growers by way of the beet crop."
Wyoming Sugar employs up to 200 people during harvest and up to 150 throughout the processing period known as the campaign. The success or failure of this company has a huge impact on the Worland community both from an employment standpoint as well as economic, Greear added.
"It provides a good cash crop for our growers," Greear said. "They are all local so the money they earn from growing sugar beets they turn around and put it right back into our community."
According to the American Sugar Alliance, 50 percent of America's sugar comes from sugar beets and these crops are the lowest cost to grow in the world. Sugar beet prices are at an all-time low in relation to the past 30 years.
"If the prices were higher the effect of the processing loss would not be as severe," Greear said. "Low prices have contributed to exacerbating the need for the request of the disaster loan."
Just like Wyoming Sugar, all sugar beet companies in the U.S. are farmer-owned, according to the ASA. Most of them are cooperatives, however, Wyoming Sugar is actually a limited liability company that mostly functions the same as a cooperative.
"We are owned by our growers and we run our operation much like a cooperative," Greear said. "In terms of the growers needing to have a share to grow an acre of sugar beets."
Wyoming Sugar was requesting the disaster relief loan on behalf of its 38 growers after estimating the total loss from this processing period. Individual growers still need to go through the formal approval process.
"This pot of money is typically used to do economic development projects," said Josh Keefe, Wyoming Business Council economic development finance manager. "The last time the business council did this for the Wyoming Sugar Co. was in 2007."
For a company to apply for this type of loan the situation has to be a result of something that is out of the businesses control, for the the sugar beet growers it was weather, Keefe added.
"We figure out what the loss is and we take each grower's contribution and figure out what that individuals share of the loss would be," Keefe said. "That determines how much that grower would be eligible for."
Wyoming Sugar estimated they will need $5,675,650 in loans from the council to cover their growers' losses.
"This helps spread the loss over 10 years so the growers just make an annual payment when they harvest their beets in the next few years," Keefe said. "Just because a producer is part of Wyoming Sugar and shares in the loss does not mean they automatically qualify for a loan."
This loan functions the same as any loan from a bank would, growers will need to apply and be approved. Each operation will be analyzed individually and then accepted or denied, Keefe added.
"This is only the fourth time since 2000 that we have done this for an agricultural entity," Keefe said.
On March 27, the WBC board held a meeting with Wyoming Sugar and unanimously declared the growers as a disaster area. Growers will need to apply for their loan from the WBC before May 15. ❖
— King is a freelance writer from Oakland, Neb., and a graduate student at Oklahoma State University in Stillwater. She can be reached at email@example.com.