Minn-Dak growers bear up under $25/ton projected payment

By Mikkel Pates / Agweek Staff Writer ​

Pat Freese, Kent, Minn., chairman of the board of Minn-Dak Farmers Cooperative, said the co-op is poised to turn upward after three tough payment years, including the 2019 impact of an early freeze. Photo taken Dec. 12, 2019, Fargo, N.D. (Mikkel Pates / Agweek)

on Dec 16, 2019 at 12:51 p.m.

FARGO, N.D. — Pat Freese says he wants to return Minn-Dak Farmers Cooperative to its status as a "shining star" in the sugar beet business.

Freese is the chairman of the board at Minn-Dak Farmers Cooperative, based in Wahpeton, N.D., which held its 47th annual meeting in Fargo on Dec. 12.

The co-op announced a $27.12 per ton beet payment, withholding $2 per ton as a "contingency," leaving the payment at a "disappointing" $25.12 per ton. Minn-Dak typically plans to end slicing beets May 20, but now expects to be done at the end of March.

After two tough years due to processing issues, the co-op brought in only 70% of the beets of their planned tonnage, driving down revenues by $18 million.

A farmer from Kent, Minn., Freese told a large crowd of shareholders that the co-op has reinvested in its infrastructure, despite the fact that some members are questioning the co-op's viability.

"Did we take our eye off the ball? Did we miss the opportunity to invest in our operations at a time when the means were available? Are we still a shining star?" Freese asked, rhetorically, but then vowed to meet every challenge going ahead.

$25.12 per ton
Freese acknowledged that some members wonder whether the co-op might have invested in their plant more in years when payments were far higher. They payment was over $70 per ton in 2012.

In the halls of the Fargo Holiday Inn, some growers privately grumbled that this year's payment to those at American Crystal Sugar Co. of Moorhead, Minn., at its annual meeting a week ago projected a $37 per ton payment on the 2019 crop. But they also acknowledged that the two co-ops — which sell sugar and byproducts cooperatively — have different systems for accounting for costs and transportation.

Minn-Dak Farmers members planted 101,000 acres and about 94,000 acres were harvested, for a 22 tons per acre average yield. Co-op members harvested about 93% of their acres, but the "field loss" on the "last 20% harvested" was very significant.

"We were allowing them to pull frozen beets out of frozen ground," explained Kurt Wickstrom, president and chief executive officer. "In some cases, we had 40% to 50% yield loss. ... They were going into fields where the yields could have been 30 tons per acre and only delivering 15 tons, due to tough harvest and yield conditions."

The co-op had expected 2.85 million tons of production, but brought in 2.1 million tons, which is a 30% reduction.

Freese acknowledged that the board had a stressful meeting on Halloween night, when they debated for three hours on whether to impose $455 per acre of fixed costs on acres that went unharvested. "It gave a little more of a carrot in order to potentially get more acres harvested," Freese said.

On brighter notes, Wickstrom described the near-culmination of a three-year spate of investment in people, plant and processes. The co-op is pleased with gains on extraction, nearing the goal of 9,500 tons per day, but needs to increase through-put and evaporation capacities. Significantly, the co-op invested $6.5 million to replace an outdated evaporator, a major piece of equipment in the factory, which will be online in mid-January.

"If we would have had, or if next year we have an average crop — and eight-year Olympic average is about 28 tons per acre — and our sugar content is 17%, it paints the path forward to profitability for most of our growers."

Wickstrom said the company has made major investments in their factory to target 9,500 tons of beets per day with high sugar extraction levels.

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December 18, 2019 at 12:05PM