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Posted on  

January 15, 2002

CARGILL PITCHES ETHANOL IDEA TO GOLDEN GROWERS

Mikkel Pates, Grand Forks Herald Staff Writer

Cargill Inc. is asking Golden Growers Cooperative members whether they would invest in an ethanol opportunity.

Cargill is the nation's third-largest ethanol producer with a total of 110 million gallons of capacity at its plants at Blair, Neb., and Eddyville, Texas. A top Cargill ethanol official addressed a closed-door session of the Golden Growers' seventh annual meeting in Fargo on Thursday. Cargill leases a $260 million corn fructose plant at Wahpeton, N.D., which is partly owned by Golden Growers. Ethanol plants are sometimes run in concert with corn wet milling plants that produce fructose. Carl Larson of Fullerton, N.D., chairman of the board of Golden Growers, declined comment on the proposal, citing confidentiality agreements.

Terry Jaffoni, an assistant vice president for Cargill and manager of Cargill Ethanol, also declined to offer details except to confirm she was making a presentation about an ethanol opportunity. Jaffoni declined to say whether the plan would involve the Wahpeton location at all.

According to grower members, Jaffoni talked about a $24 million investment by the Golden Growers into a specific project, but not necessarily at Wahpeton. The ProGold LLC plant began operation in 1996 as a partnership between Golden Growers (49 percent), based in Fargo, and American Crystal Sugar Co. of Moorhead (46 percent) and Minn-Dak Farmers Cooperative of Wahpeton.

Members who attended the meeting said the group took three votes with a show of hands. In a final vote, they asked the board to look into the feasibility of an ethanol project. ProGold operated the fructose plant for less than a year before fructose sweetener prices plummeted. This forced ProGold into the red and ultimately into the arms of Cargill for the lease deal.

With six years left on a 10-year lease, Cargill has improved the plant and pays dividends to the ProGold partners only when it turns a certain amount of profit - conditions that have not yet occurred.

Golden Growers has 1,850 members in North Dakota, South Dakota and Minnesota. The meeting drew more than 500 members, about 100 more than attended last year.

Mark Dillon, Golden Growers executive vice president, in his introduction of Jaffoni, told members that Cargill made an earlier presentation to ProGold. Jaffoni declined to confirm whether the same proposal had been made to ProGold first.

American Crystal Sugar Co. executives in previous meetings have said they are sticking to their beet sugar business and not diversifying.

Otherwise at the meeting, Golden Growers announced this was the co-ops' best year by far, financially. Golden Growers showed $2.9 million in profit in the fiscal year ended Aug. 31. That was primarily from Golden Growers' share of increased equity in the plant due to equipment improvements made by Cargill, as well as a $1 million tax refund.

The company is in the process of recouping nearly $17 million in losses from 1996 and 1997, which came out of member equity.

In his speech to members, Dillon quoted Milling and Baking News, saying high-fructose corn sweetener prices are still low but might increase 10 to 20 percent in coming months.

Dillon said negotiations between the U.S. and Mexico are progressing on sweetener policies that have kept corn fructose out of that country.

Last Friday it was reported that Mexico imposed a 20 percent sales tax on soft drinks in Mexico that are made from corn fructose - a move to bolster that country's sugar industry.
 

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