Dropping price of sugar and lower beet sugar content mean less money for farmers

Local Western Sugar Co-op beet farmers may take a beating this year.

So will people who rely on money from farmers who harvest sugar from the beets. The area will see a $12-million drop in beet-related income in 2013-14.

Powell area farmer Jerry Faxon said he hopes beets will fetch $35 per ton this year — down almost half from last year.

“It’s pretty poor,” Faxon said.

Last year in the Lovell co-op district, which includes Powell, beets were earning $61.55 per ton on average, said Kent Wimmer, director of shareholder relations for Western Sugar Cooperative in Denver.

“Compared to the last three or four years, this is going to be a difficult season,” Wimmer said.

“Everybody knows the price of sugar is down,” said Ric Rodriguez, the vice chairman of Board Western Sugar Coop.

However, the price may be increasing a bit, Rodriguez added.

Low sugar content in beets from the area this season also reduces the price, Rodriguez said.

This year’s average yield was 29.86 tons per acre — an all-time high — but with sugar content at only 14.65 percent, Rodriguez said.

The 2012 season yielded 28.8 tons per acre with a higher-than-average sugar content of 17.68 percent, Rodriguez said.

Average sugar content around here is 17.4 percent or 17.5 percent. The wet, cold weather was a factor in lower sugar content, said Mark Bjornestad, Western Sugar Cooperative representative in Lovell.

Hail nailed some farmers pretty hard early this summer and then the early cold slowed harvest.

Adding insult to injury, sugar prices were down 30 percent at the start of the season due to imports of Mexican and Cuban sugar.

Bjornestad said there were approximately 16,000 acres of beets in 2012 and about 15,500 acres in 2013 in the Lovell district of Western Sugar. Using those figures, it becomes obvious that the difference in the amount of money is significant compared to last year.

If 15,500 acres of sugar beets planted this year resulted in an average harvest of 29.86 tons per acre, and all were harvested, that would equal 462,830 tons of beets. Multiply that by $35 per ton and the gross return would be approximately $16.2 million — down about $12.2 million from last year’s estimated gross of $28.4 million, using the the same formula.

The sugar beet harvest was completed by Nov. 18, but 150 acres were not harvested due to the first wave of very cold temperatures, Bjornestad said.

The beet campaign — processing the crop in the Lovell factory — was 64 percent complete on Dec. 17. The cold weather has made processing a challenge, Bjornestad said.

Local growers usually receive four checks for their crops over the course of about one year.

The first check in November is an estimated 70 percent of the contractual obligation to the growers, Wimmer said.

The growers receive a check for an estimated 10 percent of their crop in January and again in March. The price paid on final payment in October is adjusted to the actual selling price of sugar, Wimmer said. If the price of sugar goes up, so will the farmers’ payment. If the price goes down, the farmers’ payment goes down, Wimmer said.

For the 2012 season, growers received two extra checks in February and July 2013 because sugar prices were good. The extra checks were sent to farmers before the October final payment so they could receive payments quicker, Rodriguez said.

However, that’s not likely to happen this year. Western will strive to get the best price it can for sugar, Rodriguez said.

“It takes a good year to sell everything,” he said.

Although some bigger growers planted considerably more acres, Jim Jarrett, agent for Northwest Agency Insurance, estimated that farmers on average planted 180 acres of beets this year.

Beet cultivation demands substantially higher investments in fuel, fertilizer and seed than other crops require. Then at harvest, the cost of equipment and labor is higher, especially this year when farmers were forced to harvest in glutinous mud, Faxon said.

Because sugar content is low, even with record tonnage, farmers likely won’t fare too well.

“It’s going to be a break-even year at best,” Faxon said.

The impact to the local economy from lower sugar beet prices could not be quantified, but the effects are being felt.

Sales have not been brisk at Powell area business. “As of today (Dec. 20) I’m getting reports it’s been slower,” said Jaime Schmeiser, Powell Valley Chamber of Commerce executive director.

However, she doesn’t know whether the reason is the early summer hail that damaged crops, poor beet prices or the mid-December cold snap that may have keep shoppers from venturing out.

Some farmers who had planned before the 2013 season to purchase tractors and other farm equipment, said later it wasn’t possible this winter.

“We’ve definitely seen the impact,” said Greg Wilson, general manager of Heart Mountain Farm Supply and Service.

Wilson said he hopes the weather will cooperate in the future so farmers can enjoy better yields and not struggle with early summer hail or wet and cold autumns. But farmers will persevere. “We have seen farmers, especially in this area, are incredibly resilient,” he said.

“I think it’s been a grim year for ag,” Jarrett said.