American Crystal Sugar looks ahead into 50th year
The Moorhead-based sugar co-op’s record-high $71 per ton crop is tempered by inflation and political shifts.
FARGO, N.D. — Future national politics, the economy, and market potentials dominated a major winter meeting for American Crystal Sugar Company in a year when farmers are enjoying record-high prices.
American Crystal Sugar Co. and the Red River Valley Sugarbeet Growers Association held their annual joint meeting on Dec. 1, 2022, in Fargo, North Dakota. The company will celebrate its 50th year in business in 2023, with activities running through the year.
Tom Astrup, Crystal’s president and chief executive officer, earlier had announced to shareholders that the company was projecting an “initial projection” for the co-op’s payment to shareholders of $71 per ton on 12.1 million tons of beets produced in 2022. The projection can be adjusted in the spring of 2023, and then in November 2023.
Astrup confirmed it was the highest per-ton initial projection in the company’s nearly 50-year history as a farmer-owned cooperative. The previous high was a $65 per ton initial payment projection for the 2012 crop. The highest final payment was $73.02 per ton for the 2010 crop.
Astrup and board chairman Kelly Erickson recapped the year’s production challenges that started with excessive rains, cold and flooding. The company added 52,000 acres in the spring to ensure adequate production for the company’s five factories.
“I personally believe that no industry has done more to sustain the planet, than agriculture, while at the same time feeding a growing world population,” he said.
Tricia Bannigan , chief procurement officer and vice president of global procurement for The Hershey Company , a 125-year-old snacks company based in Hershey, Pennsylvania, praised Crystal and its United Sugars Corp. sugar marketing combine with rising to the occasion in an expanding market.
Hershey has 90 brands, $10 billion in annual revenues, and 17,000 employees.
Bannigan has been with Hershey since 2014, initially an executive in packaging and specialty ingredient procurement. She holds a chemical engineering degree from Purdue University.
Bannigan said the company is working to ensure category management, strategic sourcing and sustainability/responsible sourcing.
COVID changed the dynamics of snack consumption, she said, with families staying home a key in continuing to grow snack businesses.
She said the growth of sugarbeets has been 4% over 10 years, while Hershey’s growth has been 30% in the same time.
“We would love to continue to grow with you,” she said.
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She said Hershey’s is investing about $1 billion and by the end of the year the company size will be about $10 billion.
"There is another investment, which isn’t largely public, which really almost doubles that. So we’ve got a significant amount of capacity coming online, and one of the things that keeps me up at night is how on earth are we going to get enough raw materials, trucking capacity — all of it — to make sure we’re making those great products," she said.
Bannigan said the company would “rather not” use internationally-sourced sugar, which is “less efficient, quite frankly and something we’d rather not do.”
She credited Crystal and United Sugars for “top notch supply chain performance” and credited Crystal for investing in a second dome-style sugar depot for getting sugar in position, and providing reliability and quality.
“We’re thrilled with these results,” she said.
Bannigan underlined that she meets with non-governmental organization (NGO) activists, human rights advocates, and others concerned about Hershey reducing greenhouse gas, and protecting water and soil health.
“We’re creating this as we go,” she said, about those expectations. “There’s no book on how to do this, and how to do this most efficiently and effectively.”
David Wasserman, U.S. House editor since 2007 for Cook Political Report, in Washington, D.C., said one of the realities is that leadership in the U.S. House is concentrated on the coasts and outside of the Midwest, which is the most relevant for farm policies. U.S. Senate leadership still has Democrats from rural areas.
Wasserman predicted that Rep. Kevin McCarthy, R-California, recently was re-elected as GOP leader, will get a majority of 218, votes on Jan. 3, 2023, to become the next speaker. Wasserman said McCarthy made it his mission to diversify the party.
“A big problem for Democrats moving forward is that they have not elevated the Midwestern voices in their party who are remaining into leadership positions,” he said.
Democrats “aren’t enamored with the performance" of their ranking minority member, David Scott from Georgia. There’s some questions about whether Rep. Jim Costa, D-California, “will play a larger role” on the farm bill.
“Look, there are no more Collin Petersons left on the Democratic side on the House Ag Committee, and that’s a big blow for their side of the aisle,” Wasserman said, referring to the Minnesota congressman who served as House ag chair or ranking minority leader for decades. “They don’t have people from true farm districts anymore, with a small group of exceptions.’”
Nearly half of the House of Representatives and a fourth of U.S. senators were not in office when the last farm bill was passed,
Astrup noted that beet acres dropped significantly at the co-op’s factory at Sidney Sugars Inc., subsidiary in Montana, where beets are produced by contract growers. The main reason is the “lure of corn and soybeans and other crops and it certainly sets us up for a battle for acres in 2023,” Astrup said.