Sugar Beet Labor Battles Spill Out Onto The National Stage

It’s not just nutritionists who have a problem with sugar these days, so does organized labor. The AFL-CIO is calling for a boycott of one the country’s biggest sugar producers, the American Crystal Sugar Company, based in Moorhead, Minn. American Crystal locked out 1,300 union workers more than a year ago, when those workers rejected the company’s offer for a new contract. It has been operating with replacement workers ever since.

The dispute, according to excellent reporting from our colleagues at Minnesota Public Radio, revolves around health coverage and the role of seniority in filling open positions in the company.

There’s an odd aspect to this labor dispute. The sugar business, and the sugar beet industry in particular, is as close to a planned economy as you’ll find in American agriculture. It’s paradoxical to see such a spectacular blowup in an industry that depends on carefully negotiated deals to ensure its own survival.

At the national level, the domestic sugar industry has persuaded the government to put tight restrictions on cheap imports, reserving most of the U.S. sugar market for U.S. producers. Those producers, in turn, tacitly agree not to play hardball with each other. They don’t go out and invest in expanding production, because that would drive down sugar prices.

At the local level, meanwhile, about half of U.S. sugar comes from sugar beets, and that side of the industry is dominated by farmer cooperatives. American Crystal, for instance, is owned by sugar beet farmers in the Red River valley of Minnesota and N. Dakota. Every year, the cooperatives decide how many acres each farmer should plant with sugar beets, so as to produce just the right amount: Not too much and not too little.

It’s a tidy system, aimed at job security. It makes sure that sugar producers don’t have to worry too much about wild swings in the market. Nobody (usually) makes profits that are too outrageous; if they did, new companies might jump into this business and upset the apple cart. When the U.S. government sees a shortage of sugar developing, it lets in more sugar imports to satisfy our cravings and rebuild domestic stocks of sweetness.

I should note, though, that there has been some turmoil in the domestic sugar market lately, because in 2008 a new and unpredictable player arrived on the scene. Mexican sugar producers now can export freely to the U.S. For this planned economy to work, U.S. officials have to know how much sugar to expect from Mexico before they decide how much additional imported sugar, beyond Mexico’s, that they should permit to enter the United States. In recent years, Mexican imports were less than expected, prices spiked, and sugar beet producers made out very well.

So what’s not to like? Well, big domestic buyers of sugar, such as candy makers, don’t like it at all. They’d prefer free markets, letting them import cheap sugar from Brazil.

And now, it seems that there are cracks within the sugar industry, too, as the farmer-owners and workers at American Crystal Sugar fight over how to distribute this system’s benefits. In the past, both sides have lobbied in lockstep to defend price supports for sugar. But John Riskey, president of the local union that represents the workers, told Minnesota Public Radio that the union now will switch sides and lobby Congress to end the system that supports sugar prices.

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