Domestic oversupply, imports, energy costs, the shape of new farm legislation — you name it — they're all bitter challenges to the California sugar beet industry.
Ben Goodwin, executive manager of the California Beet Growers Association in Stockton, in the association's annual report, profiled the times his growers face, starting with the impact of closures of plants in Woodland and Tracy after the fall 2000 campaign.
Noting that the closures mean loss of beet production valued at more than $66 million, or more than half the statewide value of the crop in 1998, Goodwin said they were more devastating than other refinery closures occurring since 1990.
“In previous closures, there had been consolidation, and if a grower's plant closed, he had an opportunity to contract with another facility. Those who did not opt to plant beets planted another crop; there were a number of options.”
Not so with the Woodland and Tracy plants. Goodwin said the closures left 300 growers without the option of growing beets at the same time as tomato processors were struggling with their futures, grain and corn prices were very low, and the bankruptcy of the Tri Valley Growers cooperative impaired the farming economy around the plants.
35 tons per acre
The remaining California industry, served by sugar plants in Brawley and Mendota, will likely reap higher yields, more than 35 tons to the acre with sugar content close to a 16 percent average, Goodwin predicted.
But that's not good news either, since the national market is already oversupplied. U.S. sugar output, from both cane and beet, has risen by a yearly average of 2.9 percent during the past 15 years. Yet consumption has increased at only 1.9 percent each year.
Typically, when the stocks-to-use ratio for sugar is below 15.5 percent, Goodwin said, sugar pricing improves. USDA, however, estimates the ratio at well over that mark: an estimated 22 percent for 1999/2000 and a projected 20 percent for 2000/2001.
An estimated 13,000 tons of “stuffed molasses” moving from Canada through customs loopholes compounds the oversupply, while the U.S. industry seeks relief in court.
Energy costs continue to constrict growers. Goodwin said although beet growers considered purchasing the Woodland or Tracy plants, skyrocketing costs of natural gas prevented it.
Beet growers also suffered from the diesel fuel surcharge from truckers. “To date,” Goodwin said, “the surcharge has been borne by growers who have no means to pass it on to their customers. Sugar beet growers have had to bear the burden of increased energy costs in their field operation as they planted, cultivated, irrigated, and harvested their sugar beet acreage.”
As Congress approaches new farm legislation, Luther Markwart, executive vice president of the American Sugarbeet Growers Association, accounted for some of the causes of the present situation for the U.S. sugar industry.
He said the 1996 “Freedom-to-Farm” bill was considered by Congress to be the last farm bill for production agriculture and visualized farmers afterward would rely almost entirely on domestic and foreign markets.
While the idea looked good on paper, he said, it did not stand up well as domestic production soared and foreign markets crashed.
Markwart called for a new policy to act on three fronts. First, maintain and increase demand for sugar, including overcoming critics who claim sugar, and not a sedentary lifestyle, is responsible for obesity.
Second, control of costs of production, through ownership of the industry by farmers, continued availability of farm chemicals, biotechnology, and repeal of the marketing assessment charged producers.
Third, and the most difficult, he said, is balancing supply with demand.
Markwart added that if imports cannot be controlled, domestic production restrictions or limitations could easily become a noose for the American industry.