Sugar, or sucrose, is a carbohydrate that occurs naturally in every fruit and vegetable. It is the major product of photosynthesis, the process by which plants transform solar energy into food. Two plants that produce large amounts of sugar from this process are sugarcane and sugarbeets. Refined sugar from each of these plants is indistinguishable.
In 2016, per person refined sugar (cane + beet) consumption totaled 69.7 pounds per year, up slightly from the previous year. However, the total number of deliveries has remained the same. Part of the reason for increased substitution has been high prices for corn sweeteners. (ERS)
The two primary markets for refined sugar are industrial and non-industrial. Industrial market segments include baker and cereal, confectionery (candy), other food uses, dairy (primarily ice cream), beverage and other non-food uses. This market has grown slowly over time. Non-industrial market segments include wholesalers, retailers, other non-industrial uses and hotels, restaurants and institutions. Similar to the industrial market, this market has grown slowly over time (ERS).
Four firms dominate the sugarbeet processing industry: American Crystal Sugar Company (Minnesota), Amalgamated Sugar Company (Idaho), Western Sugar Cooperative (Colorado) and Michigan Sugar Company. Sugarbeet processors contract with sugarbeet producers based on processor allotments. These allotments are adjusted annually.
Sugarbeets are one of the leading raw materials for the production of manufactured sugar in the United States. They are grown in three primary regions: Upper Midwest (Michigan, Minnesota and North Dakota), Great Plains (Colorado, Montana, Nebraska and Wyoming) and the Far West (California, Idaho, Oregon and Washington). Sugarbeets are grown in the early spring and harvested in late September and October in the Midwest. Sugarbeet yields tend to be higher in the Far West, but production costs tend to be higher as well.
Total sugarbeet production in the United States reached nearly 35.7 million tons harvested from 1.1 billion acres with an average yield of 32 tons per acre in 2017 (NASS 2017). California is unique in terms of production because sugarbeets are planted every month of the year except July and August. Because of storage losses associated with warm temperatures and given that the ground never freezes in California sugarbeet regions, sugarbeet harvests are scheduled to meet the processing needs of processing facilities. Each harvested acre of sugarbeets is the source of nearly 4 tons of refined sugar. (ERS)
Worldwide, Brazil is the largest producer of refined sugar, followed by India. The United States ranks sixth in refined sugar production, preceded by European Union-27, China and Thailand.
Sugarbeets are similar to red beets in shape but have a larger white root and are inedible when harvested. They are susceptible to numerous diseases and pests. The sucrose percentage of a sugarbeet varies, depending on the variety, crop management practices such as timing of nitrogen fertilizer application, moisture and harvest conditions. The value of a sugarbeet crop depends on the sucrose percentage in the sugarbeet, and producers are generally compensated for the amount of sugar (as opposed to tons of sugarbeets) delivered to processing facilities.
Sugarbeets are a root crop that require specialized cultivation and harvesting equipment. Sugarbeets grown in northern climates must be harvested before the soil freezes. In these areas, sugarbeets are piled at receiving stations in the fall for later transport to processing facilities. Once a sugarbeet is harvested, the plant begins to burn sucrose as it decays and the sucrose percentage declines. Sugarbeets in these areas are typically processed over a 6-month period.
The three general contract types used in sugarbeet production are: Western, Eastern and extractable sugar (Hueth and Melkonyan 2004). Under a Western contract, growers are paid according to raw sugar content of the sugarbeets delivered to the processor, adjusted by a fixed sugar extraction rate. Under an Eastern contract, growers are paid a fixed share of gross revenues from sugar and sugar byproducts, less adjustment for marketing costs and storage losses. Implicitly, extractable sugar is the basis for an Eastern contract. Under an extractable sugar contract, growers are paid according to the amount of sugar extracted from sugarbeets rather than raw sugar content. An important distinction among these contract types is that the Western contract does not address extractable sugar, the Eastern contract does so indirectly (by using the less valuable byproduct sales as one determinant of revenue) and extractable sugar contracts do so explicitly.
During the refining process, sugar stored in beet roots is separated from the rest of the plant material. Sugarbeets are washed, sliced and soaked in hot water to remove sugar-containing juices. The juice is purified, filtered, concentrated and dried in a series of steps to create refined sugar. Byproducts created in this process include molasses and beet pulp. Sugar is, by far, the most valuable product.
Because sugar content in beet roots deteriorates once sugarbeets are harvested, it is important to process sugarbeets as quickly as possible. However, as long as temperatures remain below freezing, the sucrose content of beets piled and stored outside remains fairly constant. In milder climates or years, unprotected piles of sugarbeets experience cycles of freezing and thawing and are subject to deterioration. Processors use several storage techniques to reduce spoilage of stored sugarbeets, including the use of ventilation tunnels constructed in sugarbeet piles. Some processors also have built storage facilities to extend the sugarbeet storage period.
Sugarbeet processing results in a variety of byproducts used primarily in pet foods, in bakers yeast and as a milk enhancer. Beet molasses is included in animal feed, alcohol, beverages, bakery goods and pharmaceuticals. Recently, sugarbeet molasses was being tested in Ohio and in Washington, D.C. as a green alternative to conventional road deicer. Beet pulp can also be used in animal feed as well as further processed into fiber.
In 2016 U.S. sugarbeet prices averaged $47.20 per ton, up from $46.0 per ton the previous year, and total sugarbeet production was valued at approximately $1.3 billion in 2015. (NASS 2017)
The ownership of sugarbeet processing plants is dominated by grower-owned cooperatives. All of the 20 remaining sugarbeet plants in the United States are producer-owned cooperatives. The development of cooperative ownership has implications for the bearing of risk. In a cooperative setting, growers have an increase in risk from losses that occur after harvest and from price fluctuations.
Sugar and Sweeteners prices
Sugar and Sweeteners outlook
Brester, G. and M.A. Boland, “The Rocky Mountain Sugar Growers Cooperative: Sweet or Sugar-Coated Visions of the Future,” Review of Agricultural Economics, 2004.
Crop Production Annual Summary, National Ag Statistics Service, USDA.
Crop Values Annual Summary, NASS, USDA.
Quality Measurement and Contract Design
Sugar, U.S. Baseline Briefing Book, Food and Ag Policy Research Institute (FAPRI), University of Missouri, 2012.
Sugars and Sweeteners, Economic Research Service (ERS), USDA.
Sugar and Sweeteners Outlook, ERS, USDA.
Sugar and Sweeteners Yearbook Tables, ERS, USDA.
Sugar: World Markets and Trade, FAS, USDA.
Links checked October 2017.