Harvest will be bit sweeter this fall for sugar beet producers after sugar futures prices soared to a 28-year high in August.
ICE raw sugar futures almost doubled this year to hit a 28 year peak of 23.33 cents a pound Aug. 12.
Nabi Chaudhary, senior economic crops analyst with Alberta
Agriculture, said strong world prices will help maintain a strong sugar
beet industry in southern Alberta by encouraging growers to plant more
acres.
He said strong world sugar prices are partly a result of the U.S.
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sugar industry’s ability to get rid of a massive stockpile of sugar,
lowering it to one million tonnes from 1.8 million tonnes.
“How they have done it, that’s a mystery,” Chaudhary said.
Other factors include a poor sugar cane crop in India, the diversion
of excess sugar cane to ethanol plants and the decision of some South
American sugar producing countries to hang onto their sugar instead of
selling it for low prices.
“These things start piling up,” Chaudhary said.
Alberta sugar beet producers have previously planted 34,000 to
35,000 acres of the crop for processing at Lantic Inc.’s plant in
Taber, Alta.
However, poor prices soured producers on the beet and in 2008 they
planted only 18,000 acres, which produced only 56,000 tonnes of beets
compared to 120,000 tonnes in 2007.
Chaudhary said 2008 acres also fell because excess supply prompted Lantic to limit contracts.
This year, Alberta sugar beet producers planted 32,000 acres, and
the crop is expected to yield 110,000 tonnes, down slightly because of
reseeding caused by floods.
“Generally the feeling is the crop should be average if not better.”
Chaudhary said producers will likely share in the higher prices. In
2008, producers were paid $46 per tonne of beets delivered to Lantic,
which is Canada’s only remaining sugar beet plant.
Andrew Llewelyn-Jones, agriculture superintendent at Lantic Inc.,
said the increase in world sugar prices could see higher prices all
around. In the spring, the Alberta Sugar Beet Marketing Board signed a
three-year contract on behalf of its farmers. Growers will be paid more
if world
prices rise higher than 14 cents a lb. for more than 90 days.
“Higher prices for sugar will benefit both sides of the business,”
Llewelyn-Jones said. “It puts the Taber plant in a more favourable
light.”
The next hurdle facing growers is renegotiating the sugar tariff
that ends next year. American and European Union growers are allowed to
export a limited amount of sugar into Canada and must pay a tariff on
any excess.
“That tariff is protecting our industry,” Chaudhary said.
Sugar harvest is expected to begin at the end of September. The
factory will start production Sept. 30 and operate 24 hours a day,
seven days a week until the middle of January.
