WAHPETON, N.D. - Minn-Dak Farmers Cooperative sugar beet growers are struggling financially this year, despite producing a record tonnage in 2016 that was offset by low sugar content and low sugar prices.

Kurt Wickstrom, president and CEO of Minn-Dak Farmers Cooperative, speaking at the company's annual meeting Tuesday, Dec. 6, in Fargo, N.D., said the co-op brought in 3.264 million tons, a record high for the cooperative. The company recently announced a net beet payment of $32.50 per ton. The co-op is down about $11 per ton from what they would have had, if not for crop disease problems and low selling prices for sugar. That payment is based on 115,000 acres times 28.4 tons per planted acre, or $106 million.

In 2016, the co-op produced a record crop of 28.3 tons per planted acre, and 32.4 tons per harvested acre. Wickstrom said many will find it a "challenge to break even this year, even though they've harvested the largest crop of their entire farming career."

Cercospora leaf spot disease played a large factor in cutting sugar content in beets. The crop ended up at 15.75 percent sugar, which is less than the eight-year average between 17.25 percent and 17.5 percent. Only one crop in the past 20 years (2009) had sugar content as low.

"Even though our growers sprayed five to six times this past growing season, it was just really difficult to get ahead and stay ahead because of the high infection rates," he said.

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The co-op is studying whether the cercospora-affected beets will store the same as a normal crop. The last time the co-op had a cercospora infestation was 1998. So far, the storage conditions of the beet piles are good.

The company instituted a policy of using root temperature probes when beets were being delivered, and the beets went into the pile at a cool temperature and fully hydrated.

One of the strains of cercospora disease became resistant to one of the strains of fungicide, which took the industry by surprise. "We lost an important tool in the toolbox," Wickstrom said. "If growers spray that again next year, it'll be like spraying water."

Experts at Minn-Dak, Southern Minnesota Beet Sugar Cooperative in Renville, Minn., and American Crystal Sugar Co., in Moorhead, Minn., are working with the Extension Service to come up with a regional prescription and plan to get ahead and stay ahead of the disease. The industry is working with seed companies to help find resistant genetics.

Looking ahead, Minn-Dak increased the deep-freeze capacity of the company, meaning 15 of 21 piles are ventilated. That means 1.6 million tons will have long-term processing protection, to allow safe processing "well into May."

The co-op is also hoping federal officials that regulate U.S. sugar imports will renegotiate "suspension agreements" with Mexico, which calibrated the amount of refined versus raw sugar coming into the U.S. from Mexico. Domestic suppliers need a "more balanced position," he said.

The refined sugar price for the 2016 crop is likely to be down $1.80 per hundredweight compared to the 2015 crop. "Right now, our market is oversupplied with refined sugar," Wickstrom said, noting the projected carryout or surplus remaining after expected sales, is about 17 percent of the 2016 crop. "We think that a balanced market is between 11 percent and 13.5 percent," he said.

Wickstrom said the company plans to cut its initial planting acres by 9.1 percent to 105,000 acres in 2017 from 115,000 acres. The board will likely review the appropriateness of those cuts.

The 2015 crop was "extremely disappointing" with significant pile losses and costs because of storability issues. The final payment was $35.31 per ton, based on average sugar content. The total net payment was $935 an acre, over 112,000 acres, with no unit retains.

Brent Davison, the co-op's chairman of the board, said the crop was exceptional but the price disappointing. "I think the most hope we have in the near future is getting something done with the Mexican agreement," he said. Solving the cercospora issue will take time, but farmers will need to tank mix chemicals they hadn't in the past, and will have to look more closely at variety selection.