The Sugarbeet Grower Magazine ~ Vol 49 Number 2 February 2010

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Hilleshög is a business unit of Syngenta Seeds, Inc. HILLESHÖG®, the ALLIANCE FRAME, the HILLESHÖG logo, the PURPOSE ICON and the Syngenta logo are trademarks of a Syngenta Group Company. ©2010 Syngenta Seeds, Inc. Longmont, CO 80501. All rights reserved.

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‘Serving The Nation’s Sugarbeet Community Since 1963’ Volume 49 Number 2 February 2010

Sugar Publications 4601 16th Ave. N. Fargo, ND 58102 Phone: (701) 476-2111 Fax: (701) 476-2182 E-Mail: sugar@forumprinting.com Web Site: www.sugarpub.com Publisher: Sugar Publications General Manager & Editor: Don Lilleboe Advertising Manager: Heidi Wieland (701) 476-2003 Graphics: Forum Communications Printing

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— Feature Articles — Beets Atop the Corn Rows . . . . . . . . . . . . . . . . . . . . 4 Colorado growers hone their strip-till system

What’s Happened in the Sugar Market? . . . . . . . . . 6 ASA economist provides insight into recent price rise

Russian Federation: Sugar Industry in Transition 16 The Sugarbeet Grower is published six times annually (January, February, March, April/May, July/August, November/December)

by Sugar Publications, a division of Forum Communications Printing.

North American sugarbeet producers receive the magazine on a complimentary basis. Annual subscription rates are $12.00 domestic and $18.00 for foreign subscribers.

Advertising in The Sugarbeet Grower does not necessarily imply endorsement of a particular product or service by the publisher.

Recent developments and outlook for huge nation’s sugar sector

— Regular Pages — Dateline: Washington . . . . . . . . . 10 Roundup Ready, crop insurance Around The Industry . . . . . . . . . 11 Who, what & where it’s happening 30 Years Ago

Visit Our Web Site!

www.sugarpub.com

THE SUGARBEET GROWER February 2010

. . . . . . . . . . . . . . . 12

Excerpts from our February 1980 issue

— Front Cover — Drivers traveling past the Sugar Workers Federal Credit Union in Scottsbluff, Neb., can’t miss this large metal sculpture of a sugarbeet. That’s the Western Sugar Cooperative Scottsbluff factory in the background.

Photo: Don Lilleboe

Write Field . . . . . . . . . . . . . . . . . 14 Electrons gone astray

3

Photo: Len Kerbs / Beets strip tilled into corn ground in Idaho

Beets Atop the Corn Rows Mari Brothers of N.E. Colorado Enthused With Strip-Till System, But Always Seeking Improvement ob Mari will never be a poster boy for the “This Is the Way We’ve Always Done It” club. First, he’s a sugarbeet grower. Second, he’s a young beet grower. And third, he and brother Rod are relatively new beet growers, so they’re not bound by long-term habits or tradition. They are, instead, moti-

B

vated simply by the desire and need to make their operation as efficient — and profitable — as possible. And employing a strip-till production system is a primary vehicle for the Mari brothers. The northeastern Colorado growers have planted their centerpivot sugarbeet acres under strip till

since the 2005 crop year.

The Mari foray into strip tillage began with corn back in 2000 — the same year they began growing sugarbeets for Western Sugar Cooperative.

Corn prices were very low at the time, and they saw strip till as a way of cutting inputs without sacrificing productivity. Its success in corn on their southwestern Logan County farm prompted the Maris to expand the practice into beets — and they’ve never looked back.

The Maris initially used a leased DMI, but now own an eight-row Schlagel Till-N-Plant machine. They run it across their upcoming beet ground in early spring, anywhere from a week to a month ahead of beet planting, working the soil to a 12-inch depth. They follow corn, tilling and planting directly on top of the old 30inch corn rows. The three-point Schlagel unit’s aggressive tillage does a very good job of eliminating corn root balls in preparation for the beets, Bob affirms. Custom-made firmer/rollers mounted on their JD MaxEmerge planter, coupled with trash managers, help assure a firm, clean seedbed.

“Some guys like to move over 15 inches from the old corn rows, and others will criss-cross,” planting the beets at an angle to the prior year’s corn rows, Bob notes. “But I’ve found that even with 200-bushel-plus corn, the Schlagel will clean out the residue.”

The Maris graze their corn ground, which definitely helps in dealing with crop residue, Bob adds. “The key is the cows,” he quips, “and having a machine that will clear the remaining trash efficiently from the row.” The planter’s residue managers easily handle the occasional corn root ball that may remain on the row surface.

Bob admits he may not be a “pure” strip tiller, because he does add an inseason pass through both the beets and corn with a short-blade cultivator.

“I’ll go quite slow — 4.0 mph or less in beets — because I don’t want to throw any dirt on them.” He’ll sidedress nitrogen during that pass, and also runs an anhydrous-type shank down the row centers. The shanks’ primary

Photo: Don Lilleboe

Left: Bob Mari (at left) and his brother Rod have grown sugarbeets for Western Sugar Cooperative since 2000, prior to its becoming a co-op. Their father, Clarence (right), a second-generation grower for the old Great Western Sugar Company, stopped raising beets in 1972, so there was a nearly 30-year gap for the crop on the Mari farm near Merino, Colo.

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THE SUGARBEET GROWER February 2010

THE SUGARBEET GROWER February 2010

Photo: Don Lilleboe

benefit comes much later in the season: Their slots serve as a guide for the defoliator tractor’s single-rib tires, helping the topper stay right on the beet row. Father Clarence, who operates the defoliator, says the measure really aids defoliation quality.

Mari has not yet seen a downside to planting beets into the old corn rows. He has used RTK for the past three years, and says his Trimble AgGPS EZ-Guide® guidance system fully complements it. “Staying in that controlled traffic zone leaves the ground so mellow,” he emphasizes.

“I used to travel at 4.5 mph; now I’m going 6.0. And I’m still tilling at the same depth.” The looser tillage zone soil also translates into reduced fuel consumption, he adds.

Another noted advantage to planting beets in the previous corn rows is the need for significantly less applied phosphorus. “I sample the row, not the ‘ditch,’ because that’s were I’m going to grow the crop,” Mari says. “On about half my ’09 beet acres, the only phosphorus I put down was three gallons of 10-34-0, because that’s all the soil test called for. On some fields, I saved $5060 an acre this past year.” On the other half of last year’s beet acreage — which had not been farmed previously under strip till — he applied a different nitrogen/phosphorus mixture.

Minimizing wind erosion is generally seen as a primary benefit of a strip-till production system. Most rowcrop producers will also cite soil moisture conservation as another big advantage. Bob Mari agrees with both observations for his farm; but ironically, 2009 provided the opposite scenario in terms of moisture. It was the wettest year that his 80-year-old father could recall — and the Merino area wasn’t as wet as parts of nearby Sedgwick County that tallied 18 inches of rainfall in June alone — two inches more than their average annual precipitation. “We actually lost some nitrogen in our strip-till slots because we had nine inches of rain — and a lot of it flowed into those slots,” Bob recounts. But water infiltration — especially as compared to nearby conventionally tilled fields — was excellent, and field runoff negligible on the Mari strip-tilled fields.

Bob says his biggest current challenge in strip-tilled beets is to finetune his fertility program, especially nitrogen. “I’ve been doing variablerate fertilizer application for three years now, and my data [are] getting more accurate each year,” he says. But accounting for the corn residue is a

Bob Mari came up with the concept for these firmer/rollers for his JD MaxEmerge beet planter. He took the idea to Stahley Enterprises, a machining/welding firm in nearby Merino, and they built the attachments. The firmer/rollers “press the bed where the Schlagel strip-till pass went, and then I don’t need to do anything with my trash whipper other than ‘tickle’ the soil a bit,” Bob explains. “Also, in a wetter spring, sometimes the strip-till shank slot doesn’t close back up as well, leaving air pockets. [The firmer/roller] will help close those pockets.” The fillers inside the rollers ensure that no corn root balls will become stuck.

‘I’ve had very good tonnage with my strip-tilled beets, but I’m still not where I want to be on quality.’ challenge. “Since I’m not burying it, the material tends to break down later in the season — so it can suppress my sugars,” Mari observes. “I’ve had very good tonnage with my strip-tilled beets, but I’m still not where I want to be on quality.

“It’s a process,” he continues.

“We’re constantly tweaking the sys-

euro-Maus

tem, making adjustments. Those small investments add up.”

Like many others, this northeastern Colorado producer appreciates the compatibility of a strip-till production system and Roundup Ready® sugarbeets. His labor costs in strip-till beets were close to $75 an acre prior to the introduction of Roundup Ready beets.

“Roundup has complemented strip till,” Mari affirms. “We now have a [weed control system] that is keeping up with the way we farm.

“Strip till and Roundup have made beets almost as easy to grow — other than harvest — as corn,” he smilingly concludes. — Don Lilleboe ■

For more info call 519-786-3025 www. ropanorthamerica.com or e-mail: info@ropanorthamerica.com

euro-Tiger 5

What’s Happened in The Sugar Market?

ASA Economist Provides Analysis of Past Year for U.S. & World Markets — And What May Lie Ahead Editor’s Note: Jack Roney is having fun these days. After two decades as a sugar industry economist, “I finally get to defend a price recovery,” he radiates. “This is the moment I’ve been waiting for in my career!”

The past year has been an exciting one in sugar markets, as world prices

have risen to a three-decade high and U.S. sugar prices have also risen dramatically. What factors precipitated this price rise — and what is the prognosis for the remainder of the current marketing year and beyond?

Roney, who is director of economics and policy analysis for the American

Figure 1. World Sugar Market Boosting U.S. Prices (Cents/Pound, Raw Value)

Monthly Averages, 1997-2009. U.S. — #14 or #16 Contract, Delivered New York; World — #11 Contract, Caribbean Ports. Source: USDA

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Sugar Alliance (ASA), addressed those questions and others in a February 1 presentation during the annual meeting of the American Sugarbeet Growers Association (ASGA) in Charleston, S.C. A summary of Roney’s presentation appears on these pages, with more details available on the ASA website: www.sugaralliance.org.

Additional coverage of the 2010 ASGA annual meeting will appear in The Sugarbeet Grower’s March issue.

s of late January 2010, world sugar prices — hovering around 28 to 29 cents per pound, raw value — were at their highest level since 1981.

In that year, the average world price hit 40 cents a pound — second only to the record 60-plus cents set in the mid1970s. (At the other extreme, the world price sagged to a meagerly three cents in 1985.) “We’ve had a lot of ups and downs since then,” Roney notes.

“Right now, we are at nearly a 30-year high on the world market.”

Normally, there is a wide disparity between the average world “dump” price and the U.S. sugar price levels.

“But now we’re seeing that the world market is, without question, helping to push up the U.S. price,” Roney says.

(See Figure 1.)

What have been the major factors contributing to the recent movement in U.S. sugar prices? “I’ve heard critics of U.S. sugar policy say, ‘Ah, it’s because of that ‘blasted farm bill!’ ” Roney remarks. “Certainly the farm bill has played a role. But it’s not solely responsible, by any means.” The ASA economist listed these other reasons: • The major explosion at Imperial Sugar Company’s cane sugar refinery near Savannah, Ga., in February 2008 — That tragic event resulted in the deaths of several workers and put the facility out of production for more than a year, thus reducing the nation’s cane sugar refining capacity. It had a strange effect on the sugar market, because it reduced the raw price since there was one less refiner bidding for raw sugar — but also increased the refined sugar price since there was one less refined sugar supplier.

• U.S. sugarbeet planted acreage in 2008 was 19% below that of the prior year — in large part due to the high prices of acreage-competing crops like wheat, corn and soybeans. Had U.S. beet processors not been grower-owned cooperatives, some areas probably would not have had beets at all that year, Roney states.

(Continued)

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THE SUGARBEET GROWER February 2010

Fig 2. U.S. Sugar Imports from Mexico, 1994/95 - 2009/10 (1,000 Metric Tons, Raw Value)

Unlimited access under NAFTA began as of January 1, 2008.

Source: USDA-WASDE, 2008/09 & 2009/10 forecasts.

• In August 2008, then-USDA under Secretary Mark Keenum instituted an increase in the “refined” sugar tariff rate quota (TRQ).

However, most of the additional imported sugar came into the U.S. in

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raw form, and that hurt the domestic raw sugar price.

• The Mexican peso was devalued by half in summer/fall 2008 — triggering a surge in sugar exports from Mexico into the U.S., which in turn

hurt domestic raw and refined prices.

• The threat of raw sugar forfeitures prevented USDA from increasing the TRQ, despite a predicted low stocks-to-use ratio. USDA also accepted an industry recommendation to not increase imports during the OctoberMarch period when most U.S. sugarbeets and sugarcane are being processed and that sugar is becoming available to the market.

• Finally, a big drop in exports from India and the European Union during the summer/fall of 2009 fed the surge in world sugar prices. From exporting 5.72 million metric tons, raw value, of sugar in 2005/06, the EU went to importing 2.3 MMT in 2008/09 and is projected to import 3.0 MMT in 2009/10. India exported 5.8 million metric tons, raw value, in 2007/08.

Last year that country imported 1.7 MMT; and for 2009/10, India is projected to import 2.5 MMT. India’s transformation from exporter to importer is, according to Roney, the biggest single reason for the rise in the world price. n trying to sort out the U.S. sugar market for 2009/10, one of the most vexing questions is, “How much are we going to get from Mexico?” Under the terms of the North American Free Trade Agreement (NAFTA), the United States and Mexico now share what is essentially a common sugar market without quotas. “No one has better access to the U.S. market than Mexico,” Roney affirms.

For most of 2008/09, USDA was expecting about 500,000 metric tons, raw value, of sugar to be exported from Mexico into the U.S. during that marketing year. Instead, the final volume totaled nearly 1.3 million metric tons.

The 2009/10 projection currently stands at just under 700,000 metric tons, raw value (Figure 2). “Oddly, whereas last year we thought USDA was too low for most of the year, most people in the trade now think USDA is too high” in its projection,” Roney observes. That’s because of Mexico’s lower sugar production level: 5.26 million metric tons, raw value, in 2008/09, down from 5.85 MMT the prior year.

The current USDA projection of 2009/10 Mexican production is about 5.3 MMT, raw value — and some believe it will end up even lower.

“The fact that sugar production has been declining in Mexico gives us hope for the future that they’re not going to be in a position to continually oversupply our market,” Roney states.

But there is a very important caveat here: the loophole in the

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THE SUGARBEET GROWER February 2010

NAFTA that allows Mexico, if market conditions are right, to import as much sugar as it wishes from other countries (to meet its own internal needs) — and export the then-not-needed Mexican sugar to the United States. Roney says he’s continually evaluating the incentive for Mexico to buy world sugar, substitute it for Mexican-grown sugar for internal use — and then ship the displaced Mexican sugar into the U.S. market. While the hefty increase in world prices has removed some of that option’s attractiveness, “the incentive still exists,” Roney adds, since a disparity of just six to eight cents a pound between the U.S. and world price can still make it profitable. hile obviously appreciating the current sugar price recovery, Roney emphasizes that it’s not a completely “blue sky” scenario for the U.S. sugar sector.

First, “we have contracted most of our [2009/10] sugar at lower prices than what we’re seeing right now,” he points out.

Second, percentage-wise, the U.S. price hike is less than half that of the world price increase. The 2009 U.S. prices for raw cane sugar and wholesale refined sugar, respectively, were 17.0 and 17.1% higher than those of 2008. Meanwhile, world price increases during the same period were 35.3 and 38.7%, respectively. “The world price is still a more-volatile market than [that of the U.S.],” Roney notes..

Third, when adjusted for inflation, today’s “real” prices are only half of the “nominal” price across the 25-year period between 1985 and 2009.

During that same period, the U.S. sugar industry lost about half of its processing and refining facilities as the industry was pressured into rationalization.

Fourth, farm input costs have increased tremendously since 1985: machinery and equipment, up by 83%; gas and other fuels, up 109%; ag chemicals and products, up 113%, for example. Meanwhile, there was no change in the sugar support price.

Fifth, prices of other key commodities (e.g., corn, wheat, soybeans) are up sharply since 2005, while that of sugar has been quite flat. The 2009 average raw sugar price of 24.93 cents was only 8% higher than that of 1996; the 2009 average refined sugar price of 38.10 cents only 30% higher than in 1996.

Sixth, the recent rise in the wholesale sugar price is far below the rise in price of retail sweetener-containing products during the same period.

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THE SUGARBEET GROWER February 2010

o how sustainable is the current sugar price recovery? Several key components will help answer that question, according to Roney: First, what will happen with the level of sugar imports from Mexico?

How tight is the Mexican domestic market? Will they again substitute sugar — i.e., import sugar off the world market and ship displaced Mexican sugar into the U.S.?

Second, what will be the strength of domestic sugar demand?

Domestic sugar consumption has risen steadily since Jack Roney 1996/97, with a slight decline projected for 2009/10.

Will U.S. consumers revert back to more high fructose corn syrup use?

Will artificial sweeteners take a bigger bite out of the market?

Third, will there be an increase in the TRQ, come April — and, if so, how large will it be?

Fourth, will the governments of the United States and Mexico finally accept the recommendations of the long-working U.S.-Mexico Joint Sugar Industry Task Force? And, will Mexico cease sugar substitution?

Finally, where will 2010 U.S. sugarbeet and sugarcane planted acreage end up — and what will be the level of sugar production ?

On the world front, several develop-

S

ments will impact prices. Will sugar demand remain strong . . . will production rebound in India . . . what is the outlook for Brazilian sugar production and ethanol usage?

Roney reiterates that most U.S. food manufacturers’ 2010 sugar purchases were booked at the lower price levels of early 2009. Sustaining the current stronger prices will give sugar producers the “opportunity to recover from past losses, and to reinvest to improve efficiency,” he emphasizes.

The ASA economist also notes that the U.S. sugar industry has repeatedly told the Obama Administration, “If there is a chance of a sugar shortage, we will be the first to tell you.” To maintain the industry’s current strong credibility with the Administration, it will be critical to keep that promise, he states.

Another key challenge will be to maintain domestic sugar consumption levels. The corn industry, including corn refiners, obviously is working to regain consumption — which, according to USDA, is on track to be up by more than 400,000 in 2009/10 over the previous year (Figure 3). Products made with stevia — a natural, no-calorie sweetener — also are strong competitors, Roney says.

Finally, 2012 may sound somewhat distant — but preparation for the next farm bill is already beginning. The sugar industry must be — and is — at work to ensure that the industry’s needs are adequately addressed in the 2012 farm legislation process, Roney concludes.

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Fig. 3. U.S. Sugar & High Fructose Corn Syrup Consumption (100,000 Short Tons)

Sugar deliveries for domestic food use, raw value; HFCS domestic disappearance, dry basis. By fiscal year; 2009/10 are forecast amounts.

Source: USDA Sugar and Sweeteners Outlook (10/09) and monthly WASDE.

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Dateline: Washington

By Luther Markwart

Roundup Ready Lawsuit On January 19, the plaintiffs in the Roundup Ready® lawsuit asked the U.S. District Court (9th Circuit) for a preliminary injunction to stop the “further planting, cultivation, processing, or other use of Roundup Ready sugar beets or sugar beet seeds, including the flowering of any sugar beet seed crop, until the environmental impact statement (‘EIS’) has been completed and finally approved as required by the National Environmental Policy Act (‘NEPA’)”. They have requested a March 5 date for Judge Jeffrey White to hear their argument.

The plaintiffs, who oppose biotech sugarbeets, are asking the court to take radical action that would shut down half of America's sugar supply, causing severe dislocations in the domestic supply of sugar for all consumers. There also would be disastrous impacts to 10,000 sugarbeet growers, with collateral damage to the economy in 10 states, along with processors and seed companies.

The plaintiffs have waited five years after deregulation and two years after filing their lawsuit, and now are trying to claim that irreparable harm is imminent from a product that has been widely and safely used on 95% of the nation’s sugarbeet acreage. This unreasonable request is not justified by the

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This unreasonable request is not justified by the evidence or by any real or potential threat.

We look forward to confronting it in the appropriate forum. evidence or by any real or potential threat. We look forward to confronting it in the appropriate forum for pending litigation, which is in court.

The U.S. Supreme Court has also agreed to look at issues involving the 9th Circuit Court’s handling of the Roundup Ready alfalfa case.

There are some issues in this case that could impact how our case is handled.

Crop Insurance Last November, the USDA Risk Management Agency (RMA) announced a price election for the 2010 sugarbeet crop at $41 per ton.

This is clearly below anticipated grower returns, given the stronger market conditions we see for the next year.

We have supplied RMA with timely market information to justify an upward increase in the 2010 price election.

Executive Vice President American Sugarbeet Growers Assn.

We met with the RMA administrator and his deputy in January to discuss the correction of this initial estimate. We have supplied them with timely market information to justify an upward increase in the price. A final determination is expected in early February.

2010 Elections The Scott Brown victory in Massachusetts to fill the Senate seat held by the late Ted Kennedy has breathed new life into the Republican recruitment process and set off alarms for the Democrats.

For many years now, we have had an almost equally divided political base in this country, evidenced by such close presidential elections.

The independent-minded voter, who is not strongly aligned with either party, is seldom happy with those in power and votes for anyone who is better (or different) than who they have. Thus, we get a pendulum effect with each election.

The real question is, “How many seats do the Democrats lose in the mid-term election?” The impatience and rage of the American voter will have a big impact on what is accomplished in 2010. Watch for surprise retirements in the weeks ahead as an indication of the battle on the campaign trail. The “silly season” of the November elections has officially begun.

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THE SUGARBEET GROWER February 2010

MEET THE

Jan. USDA Crop Size Estimate Nation’s Beet Crop Up By Almost 10% from 2008

TECHNOLOGICALLY SDA’s January estimate of 2009 U.S. sugarbeet production was 29.52 million tons — about 2.64 million tons higher than the size of the 2008 U.S. beet crop.

The bigger crop was the result of more harvested acres (1.15 million in 2009, compared to 1.0 million the previous year). The average yield in 2009 — 25.8 tons per acre — is one ton below the average in 2008.

At more than 10.5 million tons in 2009, Minnesota is again by far the nation’s leading beet-producing state.

Idaho, at 5.6 million tons, is second.

Its 2009 production level is nearly two

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ADVANCED

C-SERIES INNOVATION NEVER LOOKED SO GOOD MT675C

million tons above 2008 — a reflection of 2009 growth in both acres and average yield. Idaho growers harvested 163,000 acres in 2009 (versus just 116,000 in 2008) with an average yield of 34.3 tons/acre (compared to 31.2 tons the prior year.)

North Dakota was the third leading beet-producing state in 2009 with 4.8 million tons, followed by Michigan at 3.3 million.

On the sugarcane side, 2009 production of cane for sugar totaled 28.4 million tons. That compares to the 2008 U.S. output of 26.1 million tons of cane for sugar.

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Area Harvested State

2008

2009

1,000s of Acres

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California Colorado Idaho Michigan Minnesota Montana Nebraska North Dakota Oregon Washington Wyoming Total U.S.

Yield 2008

Production

2009

Tons/Acre

2008

2009

1,000s of Tons

25.3 28.6 116.0 136.0 399.0 30.7 37.3 197.0 5.9 1.6 27.1

24.6 35.0 163.0 136.0 448.0 33.6 52.6 218.0 10.5 — 24.0

41.6 26.5 31.2 28.7 24.7 26.8 22.6 25.9 33.1 41.9 24.5

40.0 27.0 34.3 24.4 23.5 29.8 24.5 22.0 37.6 — 28.0

1,052 758 3,619 3,903 9,855 823 843 5,102 195 67 664

984 945 5,591 3,318 10,528 1,001 1,289 4,796 395 — 672

1,004.5

1,145.3

26.8

25.8

26,881

29,519

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THE SUGARBEET GROWER / Upper Midwest February 2010

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Pepsi Throwback Helps Consumers Get Back to the Sweet Basics Sugar Association Applauds Pepsi-Cola Reintroduction n an early January statement, The Sugar Association applauded PepsiCola for reintroducing ‘Pepsi Throwback,’ which will be sweetened with all-natural sugar instead of high fructose corn syrup.

Pepsi is not the only beverage bottler making a return to sugar. Dr Pepper recently released Heritage Dr Pepper, and Gatorade just made a similar announcement to move back to sugar. Snapple and Jones Soda have likewise moved away from corn syrup.

“Consumers are making a move back to sugar, and we’re thrilled that Pepsi is getting back to the basics,” said Andy Briscoe, CEO of the Sugar Association. “Pepsi Throwback gives shoppers another opportunity to choose natural sweeteners instead of manufactured ones.”

High fructose corn syrup, invented in 1957, was rapidly introduced into the U.S. soft drink market in the 1970s and 1980s. Sugar remained the beverage sweetener of choice in

I

Europe, Canada, Mexico and most areas outside the United States.

Now, America appears to be shifting back again. Shoppers are already seeing Pepsi Throwback on grocery store shelves as part of Pepsi’s second eight-week trial. A similar trial was conducted in March of 2009.

“Hopefully, this reintroduction of Pepsi Throwback means that the first trial was a success,” Briscoe explained.

“And hopefully, the second trial will be just as successful so sugar-sweetened Throwback will become a permanent product on grocery store shelves.

When you think about it, sugar is the only sweetener that is all natural, only 15 calories, been safely used for over 2,000 years, and is a sweetener you can pronounce.”

Consumers having trouble locating sugar-sweetened beverages in their stores can order them through the Sugar Association’s E-Commerce website. That address is: www.sugar.org/ ebusiness/beverages.html.

■

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Planter Test Stand Schedule units checked out for wear and other potential problems are encouraged to contact their sugar company agriculturist or the host site to make an appointment.

he winter/spring 2010 North Dakota State University planter test stand schedule is provided at right. Area growers wishing to have their individual sugarbeet planter

T

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Several hundred Minnesota, North Dakota and eastern Montana growers bring in their beet planter units for testing each year. A late-1990s survey of participants estimated the cumulative value of those visits (based on one-third of the Upper Midwest region’s beet acreage being seeded with test stand-evaluated units) at between $2.5-3.0 million, in terms of avoided seed spacing and plant population problems.

Test Stand Clinic Sites February 24 & 25 — • Sidney Sugars, Sidney, Mont.

March 2 — • Minn-Dak Co-op, Wahpeton, N.D. March 3 — • Minn-Dak Co-op, Wahpeton • JD Implement, Mahnomen, Minn.

March 4 — • Minn-Dak Co-op, Wahpeton March 9 — • Southern Minn Co-op, Renville March 10 & 11 — • Southern Minn Co-op, Renville • Tim Sartents / Northstar Water Building, Ada, Minn.

March 15 — • RDO Equipment, Casselton, N.D. March 16 — • McMartin Farm, St. Thomas, N.D. March 19 — • JD Equipment, Grafton, N.D. March 22 — • Steve Williams Farm, Fisher, Minn.

• Betaseed Research, Moorhead March 23 — • Steve Williams Farm, Fisher • Betaseed Research, Moorhead • Oppegard Equipment, Hillsboro March 24 — • Steve Adams Shop, East Grand Forks, Minn.

• Oppegard Equipment, Hillsboro March 25 & 26 — • Steve Adams Shop, E. Grand Forks • Evergreen Implement, Warren, Minn.

March 30 — • Hefty Seed Co., Pembina, N.D. March 31 & April 1 — • Hilleshog Research Farm, Glyndon, Minn.

• Kittson County Implement, Kennedy, Minn.

April 5 & 6 — • Cavalier Implement, Cavalier, N.D. April 7, 8 & 9 — • Crystal Seed Plant, Moorhead

THE SUGARBEET GROWER / Upper Midwest February 2010

Around The Industry Feasibility Study Proceeding For Another Louisiana Refinery

27th International Sweetener Symposium Is July 30-Aug. 4

The November/December issue of The Sugarbeet Grower carried information on the new cane sugar refinery being built at Gramercy, La., by a partnership comprised of Cargill, Inc., Imperial Sugar Company and Sugar Growers and Refiners (“SUGAR”), a group of cane mills owned by Louisiana sugarcane producers. The joint venture — Louisiana Sugar Refining (LSR) — is expected to refine approximately 75% of the raw sugar coming from Louisiana-grown cane.

Now comes word of another possible new cane sugar refinery in the state.

According to a recent report from New Orleans-based Sugar Journal, this effort involves the company whose mills grind the other 25% of Louisiana cane — M.A. Patout and Son, Ltd. — and the Amalgamated Sugar Company, the Idaho-based beet processor.

Here is the mid-January Sugar Journal report: M.A. Patout and Son, Ltd., a Louisiana sugarcane producer and raw sugar manufacturer, and the Amalgamated Sugar Company LLC, an Idaho sugarbeet processor, are pursuing the feasibility of building and operating a 400,000-ton-per-year cane sugar refinery in Patoutville, La. The refinery is expected to process 100% of the annual raw sugar production from Patout's three operating factories: Enterprise, Raceland and Sterling. In 2009, the three factories produced over 400,000 tons of sugar.

The refinery, located in Patoutville, La., would allow access to TRQ sugar if required.

“Patout and Amalgamated are pleased to pursue the feasibility of such a venture that will allow the owners of Patout, the sugarcane growers supporting the three factories and the owners/producers of Amalgamated, an opportunity to capture value added return for their production,” Craig Caillier, president/CEO at M.A. Patout, said. “Patout and Amalgamated, if approved, will make a substantial investment and commitment in the Louisiana sugar industry for themselves and the farmers who produce the sugarcane.”

The 27th International Sweetener Symposium is scheduled for July 30 to August 4, 2010, at the Vail Marriott Mountain Resort & Spa in Vail, Colo.

This popular event is sponsored by the American Sugar Alliance.

Upheaval in the global financial sector, integration of the U.S. and Mexican sugar markets, and new supply and demand realities have made for fascinating times for the world sugar economy. Where do we go from here? Can U.S. and Mexican sugar producers find financing and some promise of market stability? Can industrial buyers of sugar depend on ample supplies? Are the sugar policies of both countries up to the test of full U.S.-Mexican market integration? Do a WTO Doha Round agreement or other trade deals presage threat or benefit for sugar producers in the North American and elsewhere?

These questions and others will be explored by panels of industry experts and key policy makers.

Traditionally, about 400 people attend the symposium to hear about significant and timely issues affecting the industry and to network with their sweetener industry colleagues. The schedule allows free time every after-

THE SUGARBEET GROWER February 2010

noon to enhance industry relations.

For more information on the 2010 International Sweetener Symposium, visit the American Sugar Alliance website — www.sugaralliance.org — or call the ASA at (703) 351-5055.

Valent & Monsanto Reinforce ‘Roundup Rewards’ Program Valent U.S.A. Corporation and Monsanto Company have strengthened their partnership in the Roundup Rewards® program with updated incentives to help farmers protect their herbicide investment in 2010.

The companies have joined forces on two programs: the Volunteer Roundup Ready® Corn 2 Cost-Share Allowance and the START CLEAN, STAY CLEAN.™ Assurance Plan.

Enhanced for 2010, farmers who use Valent’s Select Max® Herbicide with Inside Technology™ to help control volunteer Roundup Ready Corn 2 in Roundup Ready soybeans, cotton or sugarbeets may now receive up to $4 per acre. Additionally, for farmers fighting weeds in Roundup Ready soybeans with Valor®, Valor XLT or Gangster® residual herbicides and Roundup WeatherMAX® herbicide, the companies will offer up to $7 per acre if a field requires a second in-crop treatment in a season.

■

48th Annual

International Sugarbeet Institute March 17 & 18 Alerus Center Grand Forks, N.D. North America’s Largest Sugarbeet Trade Show!

100,000+ Square Feet of Exhibits Representing 125 Companies $4,000,000+ of Equipment & Products on Display

— Doors Open at 9:00 a.m. Both Days — 11

30 Years Ago Storage Rot Costs Beet Industry Millions During Each Campaign — “A sugar factory could have recovered 2.8 million more pounds of sucrose from 280,000 tons of sugarbeets had they been protected against storage rots with the fungicide thiabendazole or been genetically resistant to the rots.

“Those estimates by [USDA] plant pathologist William M. Bugbee, Fargo, N.D., are based on results comparing genetically resistant breeding lines and susceptible commercial hybrids, with and without fungicide dipping, under field conditions.

“The estimates are possible because untreated, susceptible hybrids in one test developed about the same amount of rot as was found in rot-susceptible roots held more than 100 days at a sugar processing factory.

Thiabendazole treatment reduced storage rot to a trace amount in susceptible hybrids after 100 days of storage. Rot in the genetically resistant lines was nearly as low.

“The research by Bugbee and [USDA] plant physiologist Darrell F. Cole suggests the level of protection that is possible against rot-caused sucrose losses when genetic resistance has been incorporated in cultivars acceptable to the industry. Two breeding lines developed by Bugbee and released to breeders in 1977 . . . carry high levels of resistance to Phoma beta, the chief fungal cause of sugarbeet storage rot in this country, as well as moderate resistance to Botrytis cinerea and Penicillium claviforme rots. . . .

“Thiabendazole is not generally available for use on sugarbeets. The Environmental Protection Agency, however, has granted an exemption to registered uses of thiabendazole in Washington, Idaho and Michigan for treating 400,000 tons of sugarbeet roots.”

Coca-Cola Says HFCS Is OK — “Coca-Cola Co., the nation’s largest soft drink producer, has decided to use high-fructose corn sweetener in Coke, a move likely to send significant ripples through the entire sweetener industry. The move by the nation’s largest sugar buyer sent sugar prices tumbling, but they have recovered and continue to move higher.

“Coca-Cola has allowed bottlers to use a high level of high-fructose corn sweetener in its non-cola products since June 1978, but the decision to use it in its bestknown brand has been eagerly awaited by the fructose producers. Their product is normally at least 10% less expensive than the beet and cane sugars long used to sweeten Coke. . . .

“Coca-Cola had resisted using the sweetener in its Coke drink because of taste problems. A few years ago, J.

12

Excerpts from the February 1980 Issue of The Sugarbeet Grower

Paul Austin, the company’s chairman and chief executive officer, was quoted as saying that when high-fructose sweeteners are mixed with the ingredients used to make Coke, a chemical reaction is produced that throws off the taste. But the company apparently has been able to solve that problem. Coca-Cola said lab tests and an 18-month consumer test market at a company-owned bottling plant showed there wasn’t any difference in taste or quality between fructose-sweetened Coke and regular Coke.”

Carter Cuts Tariff — “President Carter reduced the duty on imported raw sugar to 0.625 cent a pound, the lowest level allowed by law. The decision, announced by Alfred Kahn, chairman of the Council on Wage and Price Stability, brings the duty down from the 2.8125-cent level that has been in effect since Nov. 11, 1977.

Kahn said the reduction would relieve consumers of the ‘unnecessary inflationary effect’ of the higher duty.

Specifically, he said the lower duty would save consumers more than $450 million in 1980.

“Kahn said that world prices for raw sugar have risen high enough that domestic producers can cover their ‘reasonable’ costs without a higher duty. But he said the Carter administration remained committed to take actions to assure producers a minimum price of 15.8 cents a pound should prices fall in the future.”

Congress Blamed — “American consumers can thank the United States Congress for sugar price increases about to come their way, according to S.N. Knight, Sr., president of the Florida Sugar Cane League.

“Since the Sugar Stabilization Act of 1979 was defeated

by Congress October 23, domestic spot market prices have increased to over 20 cents per pound — a much higher price than the 15.8 cents called for in the legislation backed by the sugar industry. “ ‘We may be about to witness a situation similar to the one in 1974 which also occurred when Congress failed to enact legislation to stabilize the price of sugar,’ said Knight in his address during the Florida Sugar Cane League’s 16th annual meeting. ‘In 1974, the sugar industry was unjustly accused of raising sugar prices to the detriment of American consumers. Let the record stand clear now. The United States Congress and the office of the President must shoulder most of the responsibility for the tremendous instability in today’s sugar market,’ continued Knight.

“According to the League president, Congress was fooled in the name of consumers. Some sugar refiners and industrial users used the consumer movements to kill the sugar bill, saying the legislation would be inflationary.” ■

THE SUGARBEET GROWER February 2010

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By David Kragnes

ran into a disagreement with electrons again today. Sometimes they are so helpful. Marching in nice straight rows like a Russian May Day parade, their disciplined behavior and orderly rows lead you to believe they could do great things, and they can.

But with just one touch of the wrong button, they assume all the organizational characteristics of a kindergarten soccer team. I quickly get to the point where the only alternative is to unplug the game, get them back on the “buss” and start over.

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Strip-Till Research Part Two in March Editor’s Note: The January issue of The Sugarbeet Grower carried Part One of a two-part series highlighting current public research on strip-till sugarbeet production. It featured a summary of USDA work in eastern Montana, a recap of a 2009 zone-till (strip-till) field-scale trial conducted by Michigan Sugarbeet Advancement, and a report on a three-year study at North Dakota State University (Red River Valley).

The second part of this series features reports on university striptill work in Idaho and Nebraska, as well as an update on USDA-ARS studies in Idaho. Initially, we planned to include Part Two in this February issue. Instead, we will now do so in the March issue of The Sugarbeet Grower.

We’ll also continue to bring you articles about grower experiences with strip-till sugarbeet production.

14

Electrons Gone Astray It’s happened often in my past And once again today.

Just as I think I have it set, Electrons go astray.

I try to set some new device To make it do my will.

The first 16 steps have worked out, I start to feel a thrill.

Is it possible this time That new device is set?

Even if it’s going well I have learned not to bet.

You’d think the English portion Would do me the most good.

But somehow the Hebrew chapter is As easily understood.

Start with menu, like it says, Then follow in the book.

A 14-digit product code?

Where was it that I look?

I make it to the final page, The pressure starts to show.

Like a NASA mission specialist, I feel the tension grow.

What’s that, the screen says reset !

Somehow I made a mess.

My big old farmer fingers Have made an errant press.

“Where are you headed?” my wife asks As I stomp out the door.

“I am going to get my grandson To finish up this chore.”

David Kragnes farms near Felton, Minn.

He is a former chairman of American Crystal Sugar Co., and currently serves on the board of directors of CoBank.

For just as triumph is at hand And Murphy is at bay, Some circuit lets a few get out, Electrons go astray.

This time it is a TV dish I’m trying to outfox.

The hard drive on the old one crashed; They sent one in a box.

The four-pound installation book That came for me to read Has a separate language For every nation, tribe or creed.

THE SUGARBEET GROWER February 2010

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— A Sugar Industry in Transition — An Exclusive to The Sugarbeet Grower

By Peter Buzzanell* ussian beet sugar production has been trending upward in recent years, but it still only accounts for about one-half of the country’s annual demand. To fill this deficit, Russia must import massive volumes of raw cane sugar — most of which is then refined in dual beet and raw cane processing facilities.

Sugar consumption in Russia is changing from a dominance of home use to a greater share of use generated by a growing food processing industry. But with flat to negative population growth (plagued by low life expectancy, especially among males, due to poor health care and heavy smoking and alcoholism), total sugar consumption is not likely to grow significantly in the years ahead.

R

* Until his retirement from government service, Peter Buzzanell was head of the Sweetener Analysis Unit at USDA’s Economic Research Service. Currently, he is senior analyst at the consulting firm, Buzzanell & Associates. The author wishes to thank the following individuals for their assistance in preparing this article: Sergey Gudoshnikov, senior economist at the International Sugar Organization; Mark Brusberg and Thomas Puterbaugh, meteorologists with the Office of Chief Economist, USDA; Chris Rhoten, factory manager for Amalgamated Sugar Company’s Paul, Idaho, facility; staff of the Office of Agricultural Affairs, American Embassy, Moscow, and their periodic reporting on the Russian Federation’s sugar sector.

Production Trending Up After Period of Decline The sugarbeet production and processing industry is an important component in Russia’s agro-industrial sector and food supply. Sugarbeet harvested area in recent years has ranged between 800,000 to 1.0 million hectares (about 1.98 million to 2.47 million acres) and is forecast at 900,000 hectares for 2009/10 (September-August). Sugarbeet production is forecast at 26.0 metric million tons in 2009/10. The beet area has not increased significantly in recent years, mainly because of competition from spring-planted grains.

Russia is a vast country, with an area of 17 million square kilometers

Russia: Percent of Total Sugarbeet Area, By Oblast (2004)

— Conversion Factors — • • • •

16

Hectare = 2.472 acres Metric Ton = 2,206.6 pounds Kilogram = 2.2046 pounds Rubles (as of 12/31/09)

THE SUGARBEET GROWER February 2010

Source: Production Estimates & Crop Assessment Division, USDA Foreign Agricultural Service

Russian Federation

— about 1.8 times the size of the United States. The terrain is characterized by a broad plain with low hills west of the Ural Mountain range; a vast coniferous forest and tundra in Siberia; and uplands and the Caucasus mountain range along the southern border adjacent to the Black Sea. Sugarbeets are grown in the western part of Russia, with about two-thirds of plantings extending south of Moscow (map below).

A large share of sugarbeet plantings are in the North Caucasus region, mainly in Krasnodar oblast (state).

The other major producing area is the Central Black Earth region south of Moscow in Belgorod, Kursk and Voronezh oblasts. The remaining beet areas are in the Urals and western Siberia. About 50% of imports are processed in the North Caucasus region due to the location of the Black Sea port of Novorossijsk, where most of the raw cane sugar is imported.

Russia’s sugarbeet agriculture is located in a continental climate characterized by extremely cold winters.

For example, a key site is Krasnodar, which is at 45 degrees north latitude and has winter temperatures averaging (Centigrade) 1.9 in December, -0.1 in January, and zero in February, with total average annual precipitation of 673 mm (about 26.5 inches). Given the climate, with planting in AprilMay and a harvest season of September-November, Russia’s sugarbeet farmers are periodically hit by yield and acreage losses due to frosts,

both at planting and harvest times.

Yields the past five seasons averaged 25.9 (metric) tons per hectare (about 11.6 short tons/acre) versus 20.1 tons the five previous years — up nearly 30%. Analysts familiar with the Russian industry believe that the focus of sugarbeet agriculture should be on increasing yields rather than increasing area. With a higher level of fertilizer and pesticide inputs, the use of imported high-quality seeds (mainly from Europe) and improved management systems, the potential for increasing yields from the present level is substantial.

To process beets, Russia currently has 78 beet sugar factories — down from 96 factories in 1990. Russia’s beet factories are small, with an average daily slicing capacity of 3,500 metric tons (about 3,850 shorts tons). This compares with the U.S. industry of 22 factories and an average slicing capacity of 7,400 short tons. According to staff of the International Sugar Organization, the Russian beet sugar processing industry is highly concentrated in terms of ownership, with the six leading companies responsible for about 70% of beet sugar production.

Russia’s factories are forecast by USDA/Moscow to produce 3.2 million metric tons of beet sugar, raw value, in 2009/10 — down from the year before due to reduced area and lower yields, but well above beet sugar production during the first half of the 2000s (Table 1).

Given the antiquated equipment in use at many mills, there is, periodically, a shortage of processing capacity in some regions when the crop is large. To upgrade processing, the Russian government’s Commission on Agricultural Issues has prepared a development program for the sugarbeet processing industry for 2010-12. The program is aimed at increasing beet sugar production to 4.3 million (metric) tons by 2012/13. The planned program envisions substantial investments to upgrade the processing sector, including funding from the federal budget and the remaining sourcing of funding originating from factories and bank loans. The program forecasts the beet sugar share of total sugar supply rising from 60% in 2008/09 to 73% in 2012/13.

Table 1: Russian Federation — Sugarbeet Area, Yield & Production / Beet Sugar Production & Yield

5-Year Av.: 1986-90 1991-95 1996-2000 Annual: 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10*

he relationship between processors and farmers has been changing in recent years. In the recent past, processors would assist farmers through barter deals. For example, instead of paying with money, beet farmers would pay sugar processing fees by relinquishing a percentage of their crop. Or, farmers would deliver beets to processors and receive as payment refined sugar for as much as 70% of their beet deliveries. Currently, a payment to growers on a tolling basis is no longer the main system. The ISO staff reports that about 50% of Russian sugarbeet output is now produced by the beet factories themselves, with most of the rest sold and bought in a normal monetary way.

Farm-gate prices for sugarbeets have increased over the past few years, reaching 1,600 rubles (about US $53.40) per metric ton in 2008/09. In calendar 2008, wholesale prices for refined sugar were 16 rubles per kilogram at refineries, with retail prices for refined sugar varying from 20 to 35 rubles per kilogram, according to the Russian State Statistics agency.

Beginning in January 2009, prices increased significantly — from 15.82 rubles per kilogram in that month to 22.70 rubles in August. Prices started to fall in September 2009 after sugar from the new harvest season started to appear on the market. Prices are expected to rebound if world sugar prices continue to rise.

To ensure that domestic prices remain viable for farmers and processors, the Russian government schedules seasonal import duties to be imposed on both raw and refined sugar imports. The objective is to make sure imports don’t flood the market and depress prices.

T

Cane Sugar Imports Among World’s Highest The U.S. Office of Agricultural Affairs in Moscow forecasts total Russian sugar supply for 2009/10 at 6.9 million (metric) tons, with stocks and beet sugar production accounting for 57% and imports of raw and refined sugar filling the supply deficit. Imports of raw cane sugar are expected to total 2.5 million tons. They oscillate from year to year, depending on domestic beet sugar production levels. Imports of refined beet sugar have been fairly steady at 300,000 tons for the past several years (Table 2).

According to Russia’s Federal Customs Service, imports

Beet Sugar Sugarbeet Sugar Yield Production Production (Per MT

Sugarbeet Harv. Area

Beet Yield

(1,000 ha)

(MT/ha)

(MMT)

(MMT)

of Beets)

1,475 1,272 902

22.49 17.03 15.55

33.20 21.67 14.03

2.846 2.108 1.486

8.58 9.73 10.59

860 910 800 920 950 965 1,040 1,000 1,000 900

19.51 17.91 19.38 20.98 22.84 22.59 21.15 28.01 29.01 28.89

15.80 16.30 15.50 19.30 21.70 21.80 22.00 28.00 29.00 26.00

1.550 1.630 1.580 1.930 2.250 2.500 3.150 3.200 3.550 3.200

9.82 10.01 10.19 10.01 10.37 11.47 14.32 11.43 12.24 12.31

Sources: International Sugar Organization, USDA/Moscow, Buzzanell & Associates, Inc. *Projected

THE SUGARBEET GROWER February 2010

Table 2: Russian Federation — Sugar Imports & Exports

Marketing Year 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10*

Raw Cane Sugar Imports

Refined Beet Sugar Imports

Refined Sugar Exports

Net Sugar Trade

(1,000 MT, Raw Value

(1,000 MT, Raw Value

(1,000 MT, Raw Value

(1,000 MT, Raw Value

5,350 4,600 3,700 3,250 3,600 2,600 2,650 2,800 2,500 2,500

300 250 300 420 700 300 300 300 300 300

260 410 260 110 110 110 180 200 200 200

5,390 4,440 3,740 3,560 4,190 2,790 2,770 2,900 2,600 2,600

Source: USDA/Moscow, World Trade Atlas

*Projected

17

Photo: Casey Bryl / Amity Technology

Above: A Russian sugarbeet field is harvested with American-origin equipment — a Case IH tractor and an Amity Technology beet harvester. of raw cane sugar are now mainly shipped in from Brazil. Last year, Brazil accounted for nearly 90% of raw imports and Cuba only 6% (reflecting the sharp decline of that nation’s sugar industry). Gone are the barter trade agreements under which Russia agreed to send Cuba Russian crude oil in exchange for Cuban raw cane sugar.

There currently is only one standalone raw cane sugar refinery in Russia. The bulk of the imported raw cane sugar is refined at beet processing plants that have dual capacity to process raw cane sugar as well as sugarbeets. There are about 28 of these dual facilities in Russia.

According to technical experts, no special investment is needed to operate a dual facility. (In the U.S., this type of operation is not practical, however — largely due to the location of U.S. beet plants. However, in the 1980s Spreckels Sugar Company did undertake this type of operation at some of its California plants.

Interviews with former Spreckels employees revealed that the refining of raw cane sugar at their beet plants was successful technically.)

While raw cane sugar is much needed in Russia to fulfill the supply deficit, domestic sugarbeet producers have lobbied the Russian government to establish long-term seasonal duties.

The aim of these duties is to support producer incomes by ensuring a level of market stability in regard to prices.

Currently, the seasonal duty ranges from $164 to $270 per ton, based on the New York Mercantile Exchange (NYME). When prices on the NYME are high, the Russian gov-

18

ernment sets the import duty at a lower part of the range, and vice versa. The timing of the duties is adjusted periodically, but they’re generally in place during the sugarbeet processing season in an effort to create more-favorable market conditions for domestic sugar farmers.

Turning to refined sugar trade, the largest suppliers of refined sugar imports are Belarus, Moldova, Poland and Brazil. The Russian and Belarusian ministries of agriculture agreed in September 2009 that Belarus could export 150,000 (metric) tons to Russia in 2009/10 — the same level agreed upon for 2008/09. As noted on Table 2, Russia is expected to export 200,000 tons of refined sugar.

This sugar is mainly shipped to Kazakhstan, Uzbekistan, Tajikistan, and Georgia.

Population Stagnation Stymies Sugar Demand Expansion Russia’s sugar consumption in 2009/10 is forecast at 6.05 million metric tons, continuing a gradual upturn over recent years, but still well below the levels of the early 2000s.

Russia faces a serious set of population and health problems that need to be reversed before a sharp upward movement in national sugar consumption can begin to emerge.

For Russia’s population of 141.9 million, per-capita sugar use is estimated at about 40 kilograms (88 pounds).

Traditionally, about 60% of Russia’s sugar use has been for home consumption. Russians use sugar directly in their national drink (hot tea), for in-home canning of fruits, vegetable, jams and jellies, and in vodka (samogon) and fortified wine production. At various times, the government has increased the minimum price of vodka. When the legal alcohol market price is increased, it makes household production of vodka more economical than purchasing it — thus spurring in-home sugar consumption.

According to traders, the remaining 40% of sugar goes to the industrial food production sector. The structure of Russia’s sugar demand is changing as the production of sugar-containing products grows, e.g., confectionery, canned fruits and jellies, and soft drinks. (No high fructose corn syrup is used in soft drink manufacturing.)

There is a trend among the growing number of urban middle-class families to displace traditional homemade products with commercially produced varieties. According to the U.S. Office of Agricultural Affairs at the U.S. Embassy in Moscow, the long-term trend is for increasing the use of sugar in processed and convenience food products and soft drinks, and a reduction in sugar used in home canning. ussia faces a serious set of population and health problems that need to be reversed before a sharp upward movement in national sugar consumption can begin to emerge.

As noted, Russia has a population of 141.9 million. But nationally, the country is experiencing negative growth (-0.467% in 2009, reported the U.S. State Department). A prime indicator is that the life expectancy for men is only 61.4 years, compared with 74.3 years in the U.S. The reasons for the dismal data are that Russians experience generally poor health care, compounded among men with a heavy incidence of smoking and alcoholism that leads to premature deaths.

In October 2007, the President of the Russian Federation approved a demographic policy for the years 2008 to 2025. The program aims to increase life expectancy, reduce mortality, increase the birth rate, and improve the population’s health. If successful, it will take some time before the results show up in expansion in the consumption of sugar and other foods.

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THE SUGARBEET GROWER February 2010