Negotiations that saw growers, plant officials, workers and businesses in Taber and other irrigation towns staring into the possibility of the closing of the Rogers Sugar factory in Taber have concluded with an agreement between growers and the sugar company. Sugar prices have been at record highs — up to 33 cents a pound — during the life of the last three-year contract.
The old contract was $321 a tonne of sugar, equivalent to about 6.5 tonnes of delivered beets. The new contract is more complex, with a base price of $340 a tonne of sugar (15.43 cents a pound), and a bonus of half of realized sugar prices between 16 and 22 cents. So, if Rogers achieves an average of 22 cents or more per pound of sugar, growers will receive $425 a tonne of sugar extracted.
The 256 farmers who grow about 35,000 acres of beets in southern Alberta were determined to break out of their traditional role as price-takers. The last contract period wasn’t encouraging for them. They weathered the disastrous fall of 2010, when winter ended beet harvest just a week after it started leaving much of the crop frozen in the ground and useless. Last year prices hit record levels but growers were locked into a contract based on lower prices.
Growers felt they were shouldering an unfair share of the risk and missing the rewards, so they pushed hard in contract talks this spring. They felt the returns haven’t kept up with those from some other irrigated crops.
“Farmers are used to carrying crop risks,” said Gerald Third, executive director of the Alberta Sugar Beet Growers. “But, the risk in beets isn’t just in growing and harvesting the crop. Grower payments depend on the sugar extracted from the beets. So, growers take the risk that the factory runs efficiently and the beets don’t deteriorate in storage. Grower control and crop insurance end when the beets go over the scale, but the risk doesn’t.”
Third describes negotiations between beet growers and Rogers as “playing with mutually assured destruction,” because neither can exist without the other. When negotiations all but stalled and the beet growers seriously considered not growing beets this year many people in Taber were worried.
Although the area has other food processors, sugar production is a big part of the economy. Rogers employs 120 people full time and about 300 between August and March. But, without an improved contract, beets weren’t looking all that attractive to growers.
Beets fit well in southern Alberta irrigated rotations because harvest is late, usually October, after most crops are in the bin. Roundup Ready beets have also made growing a good, clean crop easier and greatly reduced the risk of soil erosion. But, the TUA (licence) for the RR beets is costly and fertilizer and irrigation costs have also risen — average input costs are $975 an acre. At $321 for a tonne of sugar — about 6.5 tonnes of beets and 20 to 25 tonnes per acre yields, growers weren’t making great money. And, the average contract is for 140 acres, not enough to justify investing in specialized new equipment. The contract gives growers a slightly better base price and half the extra returns of refined sugar prices above 22 cents a pound.