Sandhusker
Well-known member
While this is beets and not beef, something to keep in the back of one's mind as different marketing alliances spring up.....
LINCOLN — The long arm of biofuels has reached the sugar beet industry, creating controversy for a successful farm cooperative that when formed in 2002 gave beet growers a chance to add value to their crops.
In return, they got co-op payments that increased, on average, from $750 an acre to $1,028.
Things went along as planned. Farmers who owned more shares than acres easily found neighbors who would rent shares. Those who retired could sell their shares to other farmers.
In 2006, shares that were purchased for $185 four years earlier could be sold for more than $350. But that was all before ethanol's demand for corn helped drive prices for Midlands crops like corn, wheat and soybeans through the roof, making beet growing less attractive.
Now more than 15,000 shares of Western Sugar — 11 percent of the entire cooperative — are listed for sale on the company's Web page. Buyers are scarce, if not nonexistent.
Squeezed in the process are disgruntled cooperative members who have extra shares, either because they formerly rented shares to farmers who are switching to other crops or because they got out of farming.
When Roy Panwitz, 44, sold his equipment and quit farming near Alliance in 2005, he planned to sell 205 shares in Western Sugar and use the $50,000-plus to pay off remaining debt. But attempted sales fell through.
In 2007, Western Sugar fined Panwitz $380 a share — $77,900 — for failing to live up to his commitment as a shareholder to grow 205 acres of sugar beets.
"I couldn't sell them, couldn't rent them and nobody would take them for free," Panwitz said. "It was not like I can grow them myself."
Now working a railroad job in Hastings, Panwitz said he had no money to pay the fine for 2007, let alone another fine in 2008 and every year in the future.
"Then I would owe them $150,000," Panwitz said. "It's insane."
More than 10 percent of the cooperative members, including Panwitz, signed petitions seeking a member vote to reduce fines, adopt a buy-back provision for unwanted stock and to limit the salary of the chief executive officer.
The petitioners claim that the cooperative has become insensitive to issues that impact farmers' ability to grow sugar beets. They say that management decisions — such as the issuing of 6,500 new shares in 2006 — diluted the value of the stock.
Managers express little sympathy for the petitioners.
"The few shareholders circulating these petitions have decided they no longer want to live up to the obligations they made to all the other shareholders when they joined the co-op," said CEO Inder Mathur in a press release.
Mathur accused the petitioners of being "more concerned with pursuing their self-interest than working in the interest of all of the members of the co-op."
The cooperative board of directors, made up of grower-members, rejected the petitions without a vote of the membership, saying the petition subjects were inappropriate.
Kent Wimmer, director of shareholder administration for the cooperative, said dependability of the supply of sugar beets is what has made the cooperative strong since its inception in 2002.
"That is the very core of our strength," Wimmer said. "There is a delivery right (for shareholders) and there is a delivery obligation."
Ogallala farmer Martin Flaming, a petition organizer, said the company has not provided any way for growers to get out of owning shares.
"They are worth nothing," Flaming said. "The shares are a liability — not for the farmers who have enough acres to plant their shares."
LINCOLN — The long arm of biofuels has reached the sugar beet industry, creating controversy for a successful farm cooperative that when formed in 2002 gave beet growers a chance to add value to their crops.
In return, they got co-op payments that increased, on average, from $750 an acre to $1,028.
Things went along as planned. Farmers who owned more shares than acres easily found neighbors who would rent shares. Those who retired could sell their shares to other farmers.
In 2006, shares that were purchased for $185 four years earlier could be sold for more than $350. But that was all before ethanol's demand for corn helped drive prices for Midlands crops like corn, wheat and soybeans through the roof, making beet growing less attractive.
Now more than 15,000 shares of Western Sugar — 11 percent of the entire cooperative — are listed for sale on the company's Web page. Buyers are scarce, if not nonexistent.
Squeezed in the process are disgruntled cooperative members who have extra shares, either because they formerly rented shares to farmers who are switching to other crops or because they got out of farming.
When Roy Panwitz, 44, sold his equipment and quit farming near Alliance in 2005, he planned to sell 205 shares in Western Sugar and use the $50,000-plus to pay off remaining debt. But attempted sales fell through.
In 2007, Western Sugar fined Panwitz $380 a share — $77,900 — for failing to live up to his commitment as a shareholder to grow 205 acres of sugar beets.
"I couldn't sell them, couldn't rent them and nobody would take them for free," Panwitz said. "It was not like I can grow them myself."
Now working a railroad job in Hastings, Panwitz said he had no money to pay the fine for 2007, let alone another fine in 2008 and every year in the future.
"Then I would owe them $150,000," Panwitz said. "It's insane."
More than 10 percent of the cooperative members, including Panwitz, signed petitions seeking a member vote to reduce fines, adopt a buy-back provision for unwanted stock and to limit the salary of the chief executive officer.
The petitioners claim that the cooperative has become insensitive to issues that impact farmers' ability to grow sugar beets. They say that management decisions — such as the issuing of 6,500 new shares in 2006 — diluted the value of the stock.
Managers express little sympathy for the petitioners.
"The few shareholders circulating these petitions have decided they no longer want to live up to the obligations they made to all the other shareholders when they joined the co-op," said CEO Inder Mathur in a press release.
Mathur accused the petitioners of being "more concerned with pursuing their self-interest than working in the interest of all of the members of the co-op."
The cooperative board of directors, made up of grower-members, rejected the petitions without a vote of the membership, saying the petition subjects were inappropriate.
Kent Wimmer, director of shareholder administration for the cooperative, said dependability of the supply of sugar beets is what has made the cooperative strong since its inception in 2002.
"That is the very core of our strength," Wimmer said. "There is a delivery right (for shareholders) and there is a delivery obligation."
Ogallala farmer Martin Flaming, a petition organizer, said the company has not provided any way for growers to get out of owning shares.
"They are worth nothing," Flaming said. "The shares are a liability — not for the farmers who have enough acres to plant their shares."