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The destructive "sweet" deal between government and the sugar industry

USDA sugar policy is rotten
USDA sugar policy is rotten

Hundreds of millions of your tax dollars are consistently being siphoned from government coffers and paid over to a small group of people in northwest Minnesota. They use it to produce a commodity that is one of the leading causes of diseases and medical problems in America.

The product is white refined sugar manufactured through polluting, harsh chemical processes by American Crystal Sugar.

It was announced earlier this week that Crystal Sugar will default on a $71.2 million loan it has with the USDA. For collateral, the company put up an enormous pile of sugar – about 300 million pounds – which the government is forced to buy as a price of 23.93 cents per pound.

The price of sugar was running at 18.55 cents a pound earlier this summer. That means Crystal Sugar has the option to sell its sugar to the American taxpayer instead at the artificially high price of 23.93 cents.

Our government doesn’t know what to do with the sugar so it will probably end up stockpiling it in warehouses – and these storage costs will be paid for by you the taxpayer, as well.

Even though terms like “loan” and “default” are being tossed around to describe this sweetheart deal, what it amounts to is a simple arrangement:

The sugar growers will continue to produce as much sugar as they can, whether it has market value or not, and the government ensures that it will buy it from the sugar producers at high prices, courtesy of you, the taxpayer.

The program benefits only a tiny few: Crystal Sugar, its executives and management; a cadre of wealthy sugar beet farmers up and down the Red River Valley, and the jobs it creates for workers in the sugar beet processing plants.

But wait a minute: Here’s thing about those workers and their jobs. Many of them no longer have them.

That's because in 2011 Crystal Sugar enforced a brutal lockout of the workers when the union voted to strike over dictatorial contract demands made by the company.

The lockout lasted for 20 months which forced many loyal employees who had worked at Crystal Sugar for 10, 20, even 30 years to simply eat management dirt -- or buzz off.

Crystal Sugar replaced them with scabs (it’s more polite to call the “Guest Workers” now) until the strike was settled without a single concession made by management.

Hundreds lost their jobs permanently – some lost their homes. Broken families resulted.

So, yes, Crystal Sugar is providing jobs with some of the taxpayer cash it robs from “other people” but those jobs are contingent upon following the whims of management down to the letter – even though Crystal Sugar is not specifically a corporation – but formerly organized as a cooperative.

In a cooperative arrangement, everyone is technically on equal standing, from the farmers who plant the crops in the fields, to the workers in the factory, to the managers who make all the key decisions. But as the recent strike demonstrates, the Crystal Sugar Execs enjoy total power, and any cooperative member who chooses not to obey Byzantine management rules can be quickly spit out and end up on the street with nothing.

But – no matter. Hundreds of millions of your taxpayer cash continues to flow into American Crystal sugar leaving management secure, all-powerful and guaranteed a profit.

In the recent news of the default on a $71.2 million government loan, Crystal Sugar’s disgraceful President and CEO, David Berg, crowed happily to local newspapers about what a great deal defaulting on its loan is for the company:

"Everything we have under loan we do intend to forfeit," Berg told the Fargo Forum newspaper, "Today, (the government) is about the best place we have to sell sugar."

Berg also said (with a straight face) that sticking the taxpayer for millions is “beneficial to American Crystal Sugar's financial health,” and, “that's the way the program is designed to work.

Works well for them, that’s for sure. But in addition to robbing taxpayers, consider all the other negative consequences of the sugar industry in northwest Minnesota:

• As sugar beet farmers continue to expand their growing areas to continue to overproduce -- they gobble up more farmland and an environmentally dangerous regime of “green desert” is established. This Genetically modified crop monoculturing is negatively altering the natural environment of the area. See also: SUGAR DESTRUCTION

• Honey bees are dying off rapidly in the Red River Valley due to heavy use of pesticides and herbicides that are driving colony collapse disorder. See also: KILLING OUR BEES

• Land prices are soaring, driving out smaller farmers and anyone else who want to get established in the region. In Marshall County farmland land prices have reached $5,300 per acre. Source

• Some 62% of all farm subsidies (hundreds of millions) are paid to just 10% of the top, richest farmers. Source

• The sugar industry is killing jobs by driving out small farmers and population. Kittson County has lost 15% or more of its population in each of the last three Census counts of the region. (Note: Census source page currently unavailabledue to government shut down).

• Soil erosion and water pollutionare alarming problems. Heavy amounts of nitrates are leaching into rivers and groundwater. Lake Winnipeg, for example, which is downstream of the Red River is experiencing an alarming algae bloom, choking off one of the most marvelous, blue, sparkling lakes in the world. Source

• Problems with soil erosion and farm-chemical pollution in turn require millions in government programs administered by federal, state and local pollution and soil-water organizations charged with keeping the environment clean. Source

• The crop taxpayers are paying to overproduce has no nutritional value. Consumption of white refined sugar causes obesity, which leads to adult-onset diabetes, tooth decay, heart disease, hypertension and more. This drives everyone’s health care costs higher.

• High sugar prices are killing jobs across America in the confectioner industry. About 127,000 jobs have been lost because of sugar subsidies. (See Source). Those who make products, such as candy chocolate and bakeries, are forced to pay inflated sugar prices, meaning they have to lay off workers, move factories overseas and pass higher prices onto consumers.

In light of the numerous negative consequences of the out-of-control sugar industry, including its drain on the tax base of our deeply indebted country, the severe damage to the environment and the ill health effects on the population, one might reasonably ask:

“Why is this allowed to continue?”

KEN KORCZAK is a former newspaper reporter and also worked as Communication Coordinator for Minnesota's Board of Water Soil Resources. He also taught writing at the University of North Dakota and has been successfully freelance writing for more than 20 years.

Send Ken an email here: ken,

Follow Ken on Twitter: @kenkorczak


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