Crystal Sugar CEO says shareholders will lose money this year; cites unfair trade practices

Economic Indicators Associated Press

The head of American Crystal Sugar Co. said Thursday that most shareholders in the sugar beet cooperative will lose money this year, due primarily to excess supply of Mexican sugar in the market and poor yields.

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Company President and CEO David Berg delivered the bad — but not unexpected — news during the annual joint meeting of Crystal Sugar and the Red River Valley Sugarbeet Growers Association. Payments are a "miserable $37 a ton," Berg said.

"Shareholders are not making money raising sugar beets," Berg said. "Frankly they're not making money raising anything today with corn and wheat and soybean prices."

Berg said the depressed prices are felt by people in a variety of agriculture-related businesses throughout the Red River Valley, including farm equipment sales.

"It's a major economic engine around here," Berg said. "We're still paying the wages and salaries that we pay our employees, so it hasn't shown up there, but belts have been tightened every place they can be tightened."

Berg said there are signs of better days ahead. The sugar industry has prevailed in an illegal trade case against Mexico and the two governments are negotiating changes that should bring stability to the market, he said.

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"That's the first step. That's the most important one," Berg said.

Berg said the company's long-term financial health remains strong.

The company is dealing with other issues beyond sugar prices. Berg said Crystal Sugar relies on BNSF Railway for transportation more than any other sugar producer and the railway continues to experience shipment delays.

And a lawsuit was filed against Crystal Sugar and a construction company earlier this week by a former employee at the East Grand Forks, Minnesota, plant who was burned two years ago when he was sprayed with scalding beet juice. The suit seeks $2.5 million.

"I'm not going to talk about that specific instance. I just want to say that we take it extremely serious," Berg said. "Employee safety is of utmost concern here."