Ag lenders back bio-beet growers
Banker says conventional beets will be profitable, too
By DAVE WILKINS
Northwest agricultural lenders are standing behind sugar beet growers in their fight to keep Roundup Ready sugar beets.
While some lenders acknowledge that the future of the biotech crop is still uncertain, it doesn't appear to be affecting their loan decisions.
Lenders said they're approving operating budgets based on the assumption that Roundup Ready sugar beets will be planted again this year.
And even if biotech beets are banned, lenders appear confident that there will still be a crop.
Higher sugar prices could partially offset the reduced yields that would likely result from conventional beets, they said. World sugar prices are near 30-year highs.
"With the strong sugar prices globally, we believe there is going to be profitability regardless of whether Roundup Ready or conventional beets are grown," said Scott Stanger, vice president of commercial lending for Northwest Farm Credit Services in Ontario, Ore.
"A conventional beet crop may be weedier and it may not be quite as profitable, but it should still turn a profit," he said.
Sugar supplies would be reduced further and prices would likely increase even more if U.S. growers are barred from planting Roundup Ready beets, according to market analysts.
The USDA has approved Roundup Ready beets for 2011 under a set of strict conditions. But plaintiffs in a highly publicized lawsuit have asked a federal judge to block the plantings. It could be mid-March before a decision is handed down.
Stanger said he believes The Amalgamated Sugar Co. and its growers have made appropriate contingency plans.
"The time is getting short, but the growers and the company have taken the necessary measures to plant conventional seed if they have to," he said.
Ag lenders in Southern Idaho and Eastern Oregon have followed the Roundup Ready sugar beet battle with great interest.
"We all hope that the USDA and the growers prevail," said Tony Kevan, a loan officer with Magic Valley Bank in Twin Falls, Idaho.
Lenders know that input costs for a conventional crop would be much higher.
"Some of these (conventional) chemicals can get pretty expensive if you have to apply them four or five times," Kevan said.
There's also the question whether chemical companies could manufacture and deliver enough conventional herbicides in time for use on the new crop, he said.
Despite some misgivings, Kevan said he has not reduced projected beet yields for clients seeking operating loans this year.
"I haven't done that at this point," he said Feb. 15. "I haven't restricted any growers."
John Gibson, vice president of Farmers National Bank in Twin Falls, said he too is hopeful that growers will be allowed to plant Roundup Ready beets this year.
A return to conventional beet varieties would be "a nightmare for yields," he said.
"If we have to go back to growing conventional beets, there will be lots of problems. We can still grow the beets, but we won't have the yields like we did this last year," Gibson said.
Amalgamated sought to reassure bank representatives during its annual presentation to ag lenders in late January. About 70 loan representatives attended, company officials said.
"They understand where we are," Amalgamated President and CEO Vic Jaro said.
The battle to retain access to Roundup Ready sugar beet seed is the single biggest challenge now facing growers, Jaro said during a presentation at the Idaho Ag Summit on Feb. 14.
Sugar producers have enjoyed a strong market the past year as global supplies have tightened.
Amalgamated posted record sales of $839 million in 2010.
"It was our best year ever," Jaro said. "We're seeing very very good markets."