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Montana sugar industry's future uncertainHELENA, Mont. (AP)--Strong grain prices and Montana's oil boom are leading to questions about the future of the state's beet industry and its sugar factories. With the sugar beet harvest only a few weeks away, farmers are considering whether to plant beets again or switch crops. Wheat appeals to them both for its price and because growing it is less labor intensive than growing beets. That is no small consideration as the region's surging oil industry siphons laborers for $22 to $25 an hour, making it hard to hire farm help at a lesser wage. All this has civic leaders in Sidney, an eastern Montana town of about 5,000 residents, wondering whether the Sidney Sugars Inc. factory built in 1925 will have enough beets to operate in 2009. Farmers recently rejected a proposed contract for next year's crop and will vote on another proposal in early September through their organization, the MonDak Beet Growers Association. "We're still negotiating with the growers," said Steve Sing, general manager for Sidney Sugars. "We're working hard to get an agreement between us, and we'll go from there." Beet acreage under contract for this year is around 15,000 acres, the lowest since 1932 and about half what Sidney Sugars wants. Land where beets grew previously has been turned over to wheat, malting barley and corn, said Ben Larson, a Montana State University agricultural specialist in Sidney. Without sugar beets from more acres than currently under contract, the factory cannot operate in 2009, Sing said. If Sidney Sugars, which is part of Minnesota-based American Crystal Sugar Co., closed the plant, the shutdown likely would be permanent. Reopening would be too costly, Sing said. The Sidney Sugars plant, just west of the Montana-North Dakota line, is not the only one struggling. Spreckles Sugar announced this month that its plant in Mendota, Calif., west of Fresno, was closing for lack of beets. Across Montana, farmers planted nearly 32,000 acres of sugar beets, half as many as in 1998. The 2008 planting was down from 47,000 acres last year. In past years, growers in the Sidney area had little doubt that beets would be their crop and discussions with the sugar plant occurred in March. The current negotiations are happening months earlier because Sidney Sugars knows growers are looking at alternative crops, Sing said. "The cost of production for sugar beets went up significantly but prices have not kept pace," said Jeremy Norby, a grower and secretary of the MonDak Beet Growers Association, which has about 100 active members, some of them family corporations. The price of sugar has not changed much in the past 20 years, but the price of Montana wheat has roughly tripled in the past five years. The price-cost squeeze affects beet producers in south-central Montana and Wyoming, as well. But there, farmers have an extra incentive to grow sugar beets. Through Western Sugar Cooperative, they own the factories that process them. Timing of the contract negotiations in Sidney is critical given that autumn is when farmers prepare their fields--cultivating, leveling and fertilizing--for the coming crop season. The kind of work done varies with the kind of crop to be grown. Sidney Mayor Bret Smelser calls the sugar factory "the cornerstone" of the town's economy. "We're enjoying oil right now, but that comes and goes," Smelser said. Overall production-tax revenues for oil and natural gas in Montana have increased from $30.8 million in 1999 to $324 million in fiscal 2008. The sugar factory has been a steady presence, employing about 140 people year-round and offering seasonal work, Smelser said. As the negotiations continue, "the thing we're trying to do is let everybody know that maybe somebody's got to make a sacrifice someplace," Smelser said. "There are just too many jobs at stake." 9/29/08 Date: 9/19/08
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