American Crystal Sugar Company

The American Beet Sugar Company, predecessor of the American Crystal Sugar Company, was incorporated on March 24, 1899. The new company consolidated under one management four beet sugar companies that had been established by Henry Oxnard during the preceding decade. Oxnard's interest in the sugar industry had been influenced by his father, Thomas, an entrepreneur who had successfully operated cane sugar refineries in Louisiana, Boston, and Brooklyn. In 1887 Henry had traveled to Europe to learn about the beet sugar industry on that continent, where the process had originated in the early nineteenth century and was much more extensively developed than in the United States.

Oxnard came back from Europe eager to try his hand at beet sugar processing. Attracted to Nebraska by a state bounty of one cent per pound of sugar produced, he established the Oxnard Beet Sugar Company at Grand Island in 1890. The next year he built the Norfolk Beet Sugar Company in Norfolk, Nebraska, and the Chino Valley Beet Sugar Company in Chino, California, where the growing season was longer than in Nebraska. In 1894 Oxnard organized the Oxnard Construction Company, which built an addition to the Chino factory in the same year and which in 1897 constructed the plant for Oxnard's fourth enterprise, the Pacific Beet Sugar Company, in Oxnard, California.

After these four companies were combined as the American Beet Sugar Company in 1899, expansion continued in Colorado. The Oxnard Construction Company completed a plant at Rocky Ford, Colorado, in 1901. The Norfolk factory was closed in 1904 because of an insufficient supply of beets, but its machinery was salvaged and installed in a new factory at Lamar, Colorado, built in 1905. Another new factory was built in Las Animas, Colorado, in 1907 under the corporate charter of the Las Animas Sugar Company, a subsidiary of American Beet Sugar. Beet shortages forced both the Lamar and the Las Animas factories to suffer early closings and entire seasons without production during their first years, but by 1915 enough beets were being grown locally to sustain full production at both factories. Large tracts of land were purchased by American Beet Sugar near the Colorado factories and used as company farms on which cattle, swine, peas, oats, and alfalfa, as well as beets, were raised. In California, transportation of beets to the Oxnard factory was facilitated by the purchase in 1912 of the Bakersfield and Ventura Railroad Company, which became a subsidiary of American Beet Sugar under the name of the Ventura County Railway Company.

Assisting Henry Oxnard during these years were his brothers, Robert and James, with financial backing from two New York financiers, W. Bayard Cutting and James G. Hamilton. Technical expertise was acquired by importing machinery and engineers from Europe. Federal legislation alternatively helped and hindered the sugar industry. The McKinley Act (1890) provided for a bounty of two cents per pound on domestic sugar but it was repealed by the Wilson Act four years later. Domestic sugar production was further hurt by the Underwood-Simmons Act (1913), which reduced the duty on all imported sugar by 25 percent.

A summary of United Stated States sugar tariffs, 1789-1930, can be found in The Sugar Reference Book and Directory (New York, N.Y.: Palmer Publishing Corp., 1932-1933), page 84. In series 37, Miscellaneous Printed Materials, box 150.

Throughout the 1900-1920 period, the beet sugar industry was growing rapidly, especially in the western states. During this period the Great Western Sugar Company built seventeen factories; the Holly Sugar Corporation, six; the Utah-Idaho Sugar Company, ten; and the Amalgamated Sugar Company, ten. Most of these factories were located in Colorado, Montana, Idaho, and California. In response to this growth, the American Beet Sugar Company began to seek new areas for beet sugar production. The company's attention was drawn to Minnesota, from which farmers had sent beets to be processed at the Grand Island factory as early as 1892.

A small beet sugar processing plant had been built in St. Louis Park, just outside of Minneapolis, in 1898, but production ceased in 1905 after the plant was destroyed by fire. In 1906, the Carver County Sugar Company (renamed the Minnesota Sugar Company in 1911) opened a factory in Chaska on the Minnesota River southwest of Minneapolis. While most of the beets processed at the Chaska factory were grown in southern Minnesota, in the early 1920s farmers in the Red River Valley, along the northwestern border of the state, began to grow sugar beets and send them to Chaska. By 1923 the Red River Valley farmers were encouraging the Minnesota Sugar Company to build a factory in the valley. The company agreed on condition that the farmers raise money to help finance the project. East Grand Forks was chosen as the site of the factory. Commercial clubs in Grand Forks and East Grand Forks sold $300,000 in stock and obtained a $100,000 loan from the U.S. Agricultural Credit Corporation. A new company, the Red River Sugar Company, was incorporated to build the plant.

Meanwhile, Herman Zitkowski, general chemist at American Beet Sugar and one of its most influential officers, took a tour of the valley in 1924 and reported favorably to the company's management on its prospects as a plant locale. In September of 1924 the American Beet Sugar Company began negotiations with the Minnesota Sugar Company and the Northern Sugar Corporation, which had a processing factory in Mason City, Iowa. In December of that year American Beet Sugar agreed to acquire both companies through a stock purchase. It also agreed to continue construction of the East Grand Forks factory, which was opened in October of 1926. Two years later American Beet Sugar acquired its fourth factory in Minnesota and Iowa when it purchased the Iowa Valley Sugar Company's factory in Belmond, Iowa. Along with these new factories came a new corporate name, the American Crystal Sugar Company, adopted in 1934.

In August of 1929 the company had acquired an interest in the Amalgamated Sugar Company, which had factories in Montana, Idaho, Utah, and California. Six Amalgamated factories were put under the management of American Beet Sugar. Efforts to fully integrate the two companies proved unsuccessful, and in 1936 the American Crystal Sugar Company relinquished its stock in Amalgamated in exchange for ownership of Amalgamated's factories in Clarksburg, California and Missoula, Montana.

The company survived the depression years of the 1930s fairly well, and none of its factories was forced to close. However, economy measures were required. The hourly rate for common labor, for example, fell from 45 cents in 1920 to 32 1/2 cents in 1930. The staggering economy also forced the company to obtain $5 million of acceptance credit in 1930 by putting up its sugar inventory as collateral. The late 1930s saw the beginning of labor unions in the company's factories; American Federation of Labor locals were organized at Clarksburg, Oxnard, and Missoula in 1937, and other factories soon followed.

World War II increased the demand for sugar, but federal restrictions to conserve building materials prevented the construction of additional factories until after the war. Then two Minnesota factories were added in the Red River Valley, one in Moorhead in 1948 and the other in Crookston in 1954.

American Crystal continued to be affected by the increasingly competitive world sugar market. The Sugar Act of 1948 established domestic and import quotas to be enforced by the U.S. Secretary of Agriculture; the provisions of the act remained in effect until 1974. Any hope that the beet sugar industry would be boosted by the suspension of Cuban sugar imports in 1961 was dashed by increased imports from other cane-producing countries. Under these conditions the company began to pursue a course of retrenchment which was followed throughout the 1960s: the Ventura County Railway Company was sold in 1959, and factories were closed at Oxnard (1959), Grand Island (1964), Missoula (1966), and Chaska (1971). Attempts to merge with the Ideal Cement Company (1967) and the Archer Daniels Midland Company (1970) were unsuccessful.

These events created apprehension among the farmers in the Red River Valley, which contained the greatest concentration of American Crystal's factories (a fourth had been built in Drayton, North Dakota, in 1963), but which was a great distance from the corporate headquarters in Denver, where the decisions on factory operations were being made. In late 1971 the Red River Valley Sugarbeet Growers Association learned that 100,000 shares of American Crystal Sugar stock were available for purchase. A number of the association's members decided to buy the stock in order to make sure their concerns were taken seriously by the company's board of directors. In December of 1971 the president of the growers association went one step further and suggested that the association buy the company. Seventy percent of the association members voted in favor of the proposal. In March of 1972 American Crystal set up a negotiating committee to consider the proposal and also began investigating the stock and tax consequences of the sale. Negotiation over the price continued throughout the spring and summer of 1972. The final agreement settled on $86 million: $50 million for the company, $16 million to retire long-term debt, and $20 million to retire short-term debt. To finance the purchase, the farmers incorporated Crystal Grower's Corporation, for which they sold $20 million in stock; the remaining $66 million was obtained through bank loans. The final agreement became effective February 21, 1973, and on June 14 of that year the American Crystal Sugar Company was reincorporated as an agricultural cooperative.

Since 1973 the cooperative has consolidated its position in the Red River Valley and substantially withdrawn from its other operating regions. The new management moved the corporate headquarters from Denver to Moorhead, where a beet research center was also built. A factory was acquired at Hillsboro, North Dakota, in 1975 through a merger with the Red River Valley Co-op. In addition, American Crystal Sugar managed and operated the Southern Minnesota Beet Sugar Cooperative's factory at Renville, Minnesota from 1976 to 1978. In the West, however, the Clarksburg, California and the Rocky Ford, Colorado factories were operated as "non-member businesses," and the latter factory was leased to a grower-owned cooperative. The Mason City factory ceased operations in 1973, and the Rocky Ford factory was closed in 1979 (but continued to function as a distributing facility until it and the surrounding 6,000 acres were sold in 1982). Clarksburg was sold to a group of California growers who formed Delta Sugar Company. Transfer of Clarksburg to the new owners was completed in July 1984.

The expiration of the Sugar Act in 1974 led to violent swings in sugar prices that alternately enriched and bankrupted the United States sugar industry. Beet and cane sugars have also experienced increasing competition from artificial sweeteners and high fructose corn syrups. Despite these problems, the American Crystal Sugar Company has emerged in the 1980s as the nation's largest beet sugar processor.

Labor

The operations of the company require a large force of skilled and semi-skilled labor. The sugar production process was from its inception almost entirely mechanized, and the majority of the labor force occupies positions either operating or maintaining factory machinery. A wide range of skill levels is required in these positions. Among the most skilled are the foremen, who oversee various aspects of the production process. Another, peculiar to the sugar industry, is the sugar boiler, whose ability to boil the sugar without burning it makes this an especially skilled position. Others of the skilled posts--head mechanic, electrician, welder, and machinist--are related to the extensive maintenance requirements of the machinery. Connected to most of these positions are two or three assistant positions, in which workers gain skills through apprenticeship. Less skilled jobs include operators of various machines, such as carbonators, evaporators, and granulators. Janitors, supply handlers, and knife cleaners occupy the least skilled positions.

Each of the factories employs between 150 and 600 people at full capacity, but much of the labor force is seasonal. The factories' production period, called the "campaign," begins in the fall with the beet harvest (usually in September) and lasts about five months. During the campaign each factory operates 24 hours a day, seven days a week. Four separate crews are required to fill the three shifts in order to keep each employee's work week within 41 hours. Only during the campaign are the factories' full labor forces employed. During the rest of the year (intercampaign) only a skeleton labor force is retained to repair and maintain the machinery; it usually comprises about one-fifth of the campaign force.

The company's factories were unionized in the late 1930s, with each plant organizing its own union local. Those in the east (Missoula, Rocky Ford, Grand Island, Mason City, Chaska, Moorhead, and East Grand Forks) were part of the American Federation of Grain Millers; they are also referred to in the records as Beet Sugar Refinery Employees locals or simply as federal labor union locals. The California locals belonged to the Beet Sugar Operators of America, which in the late 1940s became part of a larger union organization called the United Sugar Workers Council of California. This council also represented locals at the California factories of Holly Sugar Corporation and Spreckels Sugar Company. By the late 1940s American Crystal had joined Holly and Spreckels as a management negotiating team, which bargained with the council to reach annual master contracts covering all the California factories. Individual contract changes might then be made by each factory and appended to the master contract.

Management

Until the 1970s the American Crystal Sugar Company had two levels of management organization. The top level consisted of the company's officers, including the president, the general superintendent, and the general chemist. It also included various specialized departments, such as operations, transportation, and general labor. The other level of organization comprised the management at each factory, consisting of a manager, who administered the factory's agricultural business with the farmers, and a superintendent, who managed the factory operations. The superintendent was supported by an assistant superintendent, a master mechanic, a chief chemist, a chief engineer, and a chief electrician.

From Field to Factory

Historically the cultivation of sugar beets has been accomplished by a partnership between the farmer and the company. Each year before the spring planting season, factory representatives travel through beet growing areas to obtain contracts with farmers to purchase their beets. The contracts offer specific prices, which vary according to the sugar content of the beets and the market price of sugar and which are paid to the farmer when the beets are delivered to the factory in the fall. Further payments, based on the selling prices of the finished products, are paid at a later date.

Before high quality seed became commercially available, farmers who signed the contract were required to plant seeds sold by the company, though commercial seed is now used. After the beets have grown above ground, the farmer prevents overcrowding by taking out half or more of the plants; this is known as thinning.

The harvest usually begins in September. It involves not only removing the beets from the ground but also topping them by cutting off the leafy stem at the top of the plant. Both thinning and topping require a considerable amount of seasonal labor. Sometimes groups of local high school students are hired, but more often migrant laborers from Mexico are used. The company assists the growers in recruiting migrant labor, sending agents to operate recruiting offices in various towns in Texas. The company also makes arrangements for farmers to hire fieldmen to supervise the labor. As tractors specially built for beet cultivation have come into more widespread use, less and less seasonal labor has been needed.

After the beets are harvested, the farmer transports them to loading stations, called beet dumps, where they are transferred to railroad cars or trucks for the trip to the factory. At the factory the beets are placed in large outdoor piles to await processing. Once inside the factory, the beets are washed, cut into strips called cossettes, and placed in water into which the beet's sugar dissolves. The cossettes are then removed, dried, and made into pulp to be sold as cattle feed. The sugar solution is put through various chemical processes to extract impurities, then is boiled, dried, crystalized, and packed into bags to be sold as Crystal Sugar. For a detailed description of the technical process of producing beet sugar, see Facts about Sugarbeets and Beet Sugar in the Upper Midwest (American Crystal Sugar Co., ca. 1975), in series 37, Miscellaneous Printed Materials, box 149.

From the guide to the American Crystal Sugar Company records., 1883-1979., (Minnesota Historical Society)