Beet Processor Ag Managers Outline Policies, Including ‘Financial Incentive’ Features for Upper Midwest Growers
Everyone agrees “less is better” when it comes to tare dirt. Leaving dirt in the field rather than hauling it to the piling site translates into (1) a more-efficient harvest, (2) more tons of beets per load, (3) faster cooling of beet piles and fewer storage problems, (4) less dirt being trucked from the piling site to the factory, and (5) improved factory efficiency.
But sometimes Mother Nature just doesn’t cooperate — most notably in an excessively wet and muddy harvest season. Then, too, sometimes part of the issue comes back to individual growers, e.g., a lifter that’s not properly maintained or adjusted and/or a digging depth/ground speed combination that doesn’t allow for adequate cleaning action. The result? More dirt, less efficiency.
The two Red River Valley sugarbeet cooperatives believe they have at least a partial answer for excessive tare dirt: dollars. In an effort to motivate growers to do the best job possible in minimizing tare dirt, both American Crystal Sugar Company and Minn- Dak Farmers Cooperative offer a financial incentive program on a station- by-station level. The programs operate on a “net zero” basis, i.e., in the end, the number of dollars paid out in premiums matches the number withheld in penalties. Both are in effect only during the stockpile harvest, not during the prepile period.
American Crystal’s policy has been operational since 1998. Greg Richards, the company’s former ag strategy development manager and now agronomy manager for Crystal’s Moorhead and Hillsboro factory districts, describes how it works:
“We take a look at the stockpile harvest average tare percentage for each individual station. Depending on where the individual grower is at [compared to the station average] determines how much of an incentive (premium) he gets or how much of a penalty he pays.” The current rate is 50 cents per ton for every 1% variance from the average. So if Grower A’s tare level is 2% below the station average, he receives $1.00 per ton of beets delivered. Likewise, if the tare level is 2% above the average, he’s charged $1.00 per ton.
“The incentive is for the growers to do as good a job as they can,” Richards notes. “We reward the guys who do a real good job, and we penalize those guys who do a poor job.” By operating the policy on a station-by-station basis, weather is largely removed from the equation. “If someone is in a wet harvest, their neighbor is probably in the same boat,” Richards points out. “Because it’s by station, we feel we’re in a small enough geographic area” where the playing field — weatherwise — is level.
Richards says the per-point premium/ penalty amount initially was 13 cents per ton. After reviewing the results and getting feedback from growers, however, American Crystal ag management concluded that level was not high enough to have much effect on how growers conducted their harvest operations. “Knowing that, we felt we had to provide more of an economic incentive. So two years ago we went to 50 cents,” he explains.
Not everyone likes the system, of course. And, not surprisingly, “the ones we hear the most from are the guys who are getting the bigger penalties,” Richards says. The top premium to date has been above $20,000; the highest penalty amount thus far has been around $25,000.
Despite some dissatisfaction from penalized growers, no changes to the Crystal policy are expected for at least a couple years. Its impact was partially clouded by the very wet 2009 harvest in the Red River Valley, and company ag management wants to review and evaluate its usefulness under “more-normal” digging conditions.
“Our goal is simply to reduce the amount of tare,” Richards emphasizes.
In the southern Red River Valley, Minn-Dak Farmers Cooperative has had a financial incentive tare policy in place since 2005. In June, the Minn- Dak Board of Directors amended the policy in an effort to encourage growers to decrease further the amount of tare dirt delivered along with their beets. Changes include the elimination of the “neutral zone” for computation of payments/charges and moving from an overall cooperative average to individual station averages (similar to American Crystal) for determining payments/charges. Under the new Minn-Dak policy, the payment/penalty rate is 15 cents a ton per 1% of tare deviation from the station average.
Tom Knudsen, Minn-Dak’s vice president-agriculture, says the cooperative’s operations department estimates dirt/mud handling costs to be $1.00 to $1.50 per ton of beets delivered. “That does not include transportation costs to haul the mud from the storage piles to the factory, or the losses in storage that can be attributed to mud,” he adds.
“Mud is the new ‘bully on the block,’ ” Knudsen continues. “It slows down harvest at the receiving station; it detracts from long-term storage goals; it adds to transportation costs, reduces efficient processing — and, in the end, causes lots of handling and storage issues once it leaves the [factory] process.
“Until sugarbeets grow on a bush, mud will always be a problem,” Knudsen remarks. “Everyone agrees it is best to leave it in the field in the first place.”
Like American Crystal, Minn-Dak is hosting lifter clinics this summer, featuring industry experts providing growers with tips on how to fine-tune their operation to reduce tare. Minn- Dak also is instituting an idea contest among its growers and their employees to share ways of reducing tare.
To the south, Southern Minnesota Beet Sugar Cooperative has had a tare dirt premium/penalty policy in place since 1998. The SMBSC program operates on a company-wide basis, however — not station-by-station. Also, “our range from top to bottom is divided into thirds,” reports Ken Dahl, Southern Minn’s agricultural superintendent. “The middle third is ‘neutral,’ the ‘better than average’ third gets a premium, and the ‘poorer than average’ third receives a reduction in payment.”
As at American Crystal and Minn- Dak, the Southern Minn tare program is in effect only during the main harvest season, not in prepile.
Dahl says the dollars involved in the SMBSC premium/penalty program basically equate to the “actual dollar amounts we could identify that the increased tare cost us in such areas as reduced slice rate, reduced extraction, tare disposal costs, and so forth.
“When we instituted the policy, we did have growers making changes in their harvest equipment [to reduce the amount of tare dirt} — which is what we wanted,” Dahl adds.
While other beet cooperatives don’t currently have a financial payment/ penalty tare policy in place, they typically have some sort of policy to encourage growers to minimize tare as much as possible.
Western Sugar Cooperative, for instance, has worked proactively with grower associations in its operating areas to set tare limits in each area, says Mike Hofer, the Denver-based coop’s vice president-agriculture. “Once a shareholder truck exceeds the tare limit three times in a day, that contract (field) is no longer allowed to be weighed by the scale computer. The shareholder must then start harvesting in a different field.”
Hofer says the objective behind Western’s policy is to let growers know early on in the harvest if they are not meeting tare standards, thus allowing them to adjust their lifters and/or operating procedures to correct the problem. “The policy has been very successful,” he adds. “It has reduced tare delivered, which results in cleaner beets in the pile, better piler performance and better truck turn times.”
Western Sugar has not established a financial premium/penalty system similar to the Red River Valley cooperatives. “The penalty of shutting down for the day — or having [the grower] switch fields — is perceived as a bigger penalty when you are trying to harvest a crop,” Hofer observes.
Amalgamated Sugar Company’s contract with its grower/stockholders in Idaho and eastern Oregon does not reward or penalize the grower for his tare.
“Return dirt from the piler cleaners is hauled away by the grower association, and the grower is charged a per-ton fee for this service,” explains John Schorr, Amalgamated’s corporate director of agriculture. “Loads of beets can be rejected for excessive tare, because the grower agrees to deliver clean beets.”
Michigan Sugar Company does not currently have a premium/penalty policy on tare dirt, either. However, it is a topic that likely will be addressed at grower/shareholder meetings this coming winter, indicates Paul Pfenninger, the co-op’s vice president-agriculture. “We have discussed this issue with our grower relations committee and our board,” he says. “But we believe it is too early to implement a premium/ penalty without first educating and working with the growers.”
In a related vein, Pfenninger says he is looking forward to the time when sugarbeet varieties with the “smooth root” characteristic will be grown commercially. The smooth-root trait eliminates a lot of the feeder roots that in turn create the surface that allows soil to adhere to the root.
“The genetics are available, but industry-wide, we have not been able to maintain the quality — especially in sugar content — in most smooth-root varieties,” Pfenninger notes. “Smooth-root releases have been made, but not yet successfully crossed into a commercial sugarbeet variety.” — By Don Lilleboe
Editor & General Manager of The Sugarbeet Grower