Amalgamated asks growers to reduce acreage
By John O’Connell
Amalgamated Sugar Co. has asked its growers to slightly reduce their planted sugar beet acres this season due to an oversupply of sugar on the market.
Amalgamated growers hold company shares, each obligating them to plant an acre for a combined 180,000 acres. But overages have been allowed in the past.
Two seasons ago, the company permitted growers to plant up to 107 percent of their shares. Last season, as prices declined, Amalgamated restricted plantings to 103 percent of shares, though growers ultimately planted a half a percent fewer acres than the allowed overage.
The company will limit growers to planting only their actual shares this season, said Snake River Co-op Chairman Duane Grant.
Grant said growers who wish to plant below their shares may strike a balance by cooperating with growers willing to plant a little more. Grant, who planted his full 103 percent of sugar beets last season, plans to convert the excess acreage this season to malt barley.
“There is an oversupply of sugar on the market right now and prices reflect that,” Grant said. “The board made a decision to do our part to reduce production in an effort to bring supplies back in balance with consumption.”
Sugar prices have been so low lately, U.S. sugar companies forfeited a combined 382,000 tons of sugar from their 2012 crop, used as collateral to secure low-interest loans to cover growers’ operating costs, rather than fully repaying the loans. Amalgamated forfeited 125,000 tons of sugar, which is being shipped to Pacific Ethanol plants in Burley, Idaho, Boardman, Ore., and Stockton, Calif., for ethanol production.
The sugar industry hadn’t experienced widespread forfeitures since 2000. Grant attributes the supply problem to Mexican producers flooding the U.S. market with sugar. Though the Mexican sugar industry doesn’t plan to reduce its production this season, Grant said Mexico has indicated it plans to shift sugar shipments from the North American market to the world market.