Photo by Kensie Wallner

American Crystal’s Incalculable Miscalculation

Our Opinion/ Federal Sugar Beet Subsidies totaled $242,064,005 for 9,071 farmers between 1995 and 2010

By John Strand
Staff Writer

American Crystal Sugar Company’s lockout of 1,300 employees since August 1 begs a critical analysis of the cooperative’s role in the federal farm program as well as worker rights issues. Somehow, somewhere, the two sides urgently need to find a resolution. If this is as simple an issue as ‘busting’ the union, then the writing is on the wall. And so are the consequences to the industry, itself, as well as to our region.

That employees are locked out and, on the North Dakota side, not getting any sort of unemployment insurance income has opened up a Pandora’s Box of issues and scrutiny. The notion that employee union reps are demanding too much of the cooperative leads to questions regarding how much the farmers, themselves, garner courtesy of the taxpayer in form of farm subsidies. Similarly, heeding warnings issued by Sen. Kent Conrad, the actions of American Crystal are putting the federal sugar program at risk.

It behooves us to take a look at those broader issues.

The Cooperative

According to American Crystal’s web site, the cooperative is owned by approximately 3,000 shareholders farming some 500,000 acres of sugar beets in the Red River Valley. It is the largest beet sugar producer in the country, producing approximately 15 percent of America’s sugar. The farmer-owned cooperative has factories in Drayton, Hillsboro, Crookston, East Grand Forks, Moorhead, and Sydney, MT. Its corporate headquarters are in Moorhead.

The Sugar Program

It is no secret that national protectionist policies have long helped secure a place for beet sugar producers in a global market that seems to avail cane and less expensive product from other countries with other economies. The role of the sugar beet industry in the Valley is well understood and historically appreciated.

That said, the lockout of employees and the continued absence of an amicable and reasonable resolution no doubt will, as Sen. Conrad alluded to, put the national sugar program at risk.

The lockout also begs a more critical scrutiny of the industry, itself, and benefits realized by the farmers via farm and sugar beet subsidies.

The Subsidies

Any unwanted focus on the Federal Farm Program, including farm subsidies and specifically sugar subsidies, is an undesirable and sensitive topic in an agricultural region such as ours. Conversely, in places like North Dakota, which tend to favor business over workers—remember, we are in a Right to Work state (right to fire, more accurately) —the notion of garnering public anti-union sentiment is an easy path, particularly among GOP leadership literally running all branches of state government.

Further complicating, or perhaps simplifying the discussion, there is little credence any more to the notion that we have much in terms of small family farms, plain and simple. Today’s farms are anything but small.

That said, while public sentiment questions the labor union and its apparently unacceptable demands of American Crystal stakeholders, we cannot avoid a similar scrutiny of taxpayer dollars lining pockets of relatively rich farmers, to the tune of millions upon millions of dollars.

Federal Sugar Beet Subsidies totaled $242,064,005 for 9,071 farmers between 1995 and 2010 (Environmental Working Group data, http://www.farm.ewg.org, current as of 2011). With a reported 3,000 sugar beet farmer stakeholders in American Crystal, you can extrapolate and do the math yourself. On face value, one-third. Of that $242 million, nearly $193 million was via the Sugar Beet Diversion Program, with the remaining $49 million as part of the Sugar Beet Disaster Program.

In light of the current federal deficit and nearly bankrupt government subdivisions across the country, the lockout of American Crystal workers naturally leads to criticism of the farmers, themselves. That scrutiny of the sugar program very possibly puts the entire farm subsidy program at risk.

For example, best we can tell, the current chairman of American Crystal’s board reportedly received $495,047 in total farm subsidies between 1995 and 2010, including $57,989 in sugar beet subsidies. One other recent board chairman received $425,898 in total farm subsidies in that same time period, including sugar beet subsidies amounting to $39,923. Yet another former chairman of the board, as we read the information, garnered $629,152 in total farm subsidy payments in the same 16-year time frame, including $43,898 in sugar beet subsidies.

That, mind you, is just the tip of the iceberg, a mere glimpse into the farm subsidy and sugar beet subsidy picture.

Nationally, sugar beet subsidies rank 20th in the overall federal farm subsidy program. An astounding total of $261.9 billion (yes, BILLION) in farm subsidies were distributed to U.S. farmers between 1995 and 2010, according to Environmental Working Group data. The top 10 percent received 74 percent of all subsidies, amounting to $165.9 billion over 16 years and averaging $30,751 per year, while the bottom 80 percent received $587 average annually. Some 62 percent of U.S. farmers did not receive subsidies at all.

The Bottom Line

If American Crystal stakeholders continue to dig in their heels and go down the path of potentially busting the union representing their long-term employee base, the inevitable criticism of farm subsidies and sugar beet subsidies will not work to their advantage. Period. The problem is, however, as they say on the farm, the horses are already out of the barn, or, put another way, the farmers may well shoot themselves in the foot.

Action by the farmers and their elected leadership will very possibly, or perhaps assuredly, turn on the farmers, themselves, and as per the warning of Sen. Kent Conrad, put the sugar program, specifically, and the farm program, itself, we predict, at immeasurable and unquantifiable risk.

It’s past time for American Crystal and its employees to find resolution. It’s past time to get those 1,300 union workers back on the job, lest an immense cost to the entire region comes home to roost, which we highly doubt is the farmers’ desire. American Crystal’s miscalculation may potentially lead to incalculable and deleterious results for their very own industry, and for the entire Red River Valley.

And that would be a shame.

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