Weather, lockout both crimp Crystal

Article by: MIKE HUGHLETT , Star Tribune
Updated: January 16, 2012 - 8:20 PM

Sugar beet producer says a late start in the processing season was the biggest factor in a 39 percent drop in the co-op's net proceeds.

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Sugar beets in 1998 outside American Crystal’s plant in Moorhead. Weather issues cut into the most recent quarter’s net.

Photo: , Associated Press

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American Crystal Sugar posted a 39 percent decline in net proceeds during its most recent quarter, the first full quarter since it locked out 1,300 workers on Aug. 1.

The decline is largely due to weather issues that hurt this year's crop and delayed the start of sugar beet processing season, said Brian Ingulsrud, a Crystal Sugar vice president. But he acknowledged that the lockout has had a financial impact on the company, declining to provide specifics.

Moorhead, Minn.-based Crystal Sugar, the nation's largest beet sugar producer, had net proceeds of $186.7 million in its fiscal first quarter ending Nov. 30, down from $260.3 million a year earlier, according to a federal securities filing on Friday. Net proceeds for the farmer-owned co-op are akin to net earnings.

The decrease was primarily due to a 30 percent drop in the tonnage of beets processed during the quarter compared with a year earlier. Roughly 85 percent of that processing decline stems from beet crop issues, Ingulsrud said.

Statewide, the sugar beet harvest was down 24 percent in 2011 from the previous year, according to the U.S. Department of Agriculture. Also, because the harvest started late, Crystal Sugar had 23 fewer beet processing days during its last quarter than it did a year earlier.

The lockout has packed an economic punch to workers, too. A recent union report concluded that locked-out workers and their families are losing $1,000 to $2,300 per month in income, and that's after accounting for unemployment benefits that some workers received.

Crystal locked out 1,300 workers at its five Red River Valley plants after they resoundingly rejected a contract offer. The contract would have raised medical costs and weakened some contract language, including about seniority rights, though it also would have raised wages 13 percent over five years.

Representatives of the company and the Bakery, Confectionery, Tobacco Workers and Grain Millers union have met sporadically since, including informal talks held last week. But little progress appears to have been made, and the company rejected a new union contract proposal last week.

Mike Hughlett • 612-673-7003