Some question if Crystal still acting as a co-op
"The question is a tough one, and many, many people are asking it," said Bill Patrie, executive director of Common Enterprise Development Corp., a nonprofit organization in Mandan that helps co-ops and other mutually owned businesses form.
Patrie said it is not unusual for a successful co-op to evolve into a business far different from its origins.
"In the case of American Crystal — and many other co-ops of its age or financial size — there is a morphing into a more corporate model, where cash returns are the measure of the company's success rather than the service provided to its members," Patrie said.
At its simplest, a cooperative is a business enterprise that provides services to its members, said Patrie, who added that the founding purpose of American Crystal was to process the sugar beets of its members and to sell the sugar.
He called the purchase of the company by growers in 1973 a proactive move.
"If no one would have bought it, they would not have been able to sell sugar beets," Patrie said.
At least, that was the fear.
In the late 1960s and early 1970s, tensions were high between growers and American Crystal, a corporation that operated out of Denver, Colo., and whose roots reached back to the 1890s, when a man named Henry Oxnard opened a beet sugar factory in Grand Island, Neb. Over the course of nearly a century, the company evolved into a large, privately held business with facilities in several parts of the country.
In the early 1970s, area sugar beet growers were becoming increasingly concerned about the company's lack of responsiveness to grower requests, including calls that beet piling stations be expanded and improved.
Farmers were also aware of the company's tendency to close unproductive plants. And with four of American Crystal's seven facilities located in the Red River Valley, growers were concerned local facilities could be targeted.
When growers voted to buy American Crystal Sugar in a deal worth $86 million, they did so out of a desire to control their own future, said Minnesota State University Moorhead archivist Terry Shoptaugh, who wrote a book on American Crystal's history.
"When they (growers) bought this company and turned it into a cooperative, that made them masters of their own destiny," Shoptaugh said. "They could bring in the people they wanted to manage the company, and they would grow the beets that became the sugar."
As the co-op grew stronger over the years, management has displayed what might be seen as corporate muscle-flexing, with the current lockout being just one of the recent examples.
The co-op also embarked on a legal battle in a number of area counties in the last decade challenging the amount of property taxes the company pays. As a result, its tax burden was eased somewhat.
In Minnesota's Clay County, where American Crystal is one of the county's largest taxpayers, a settlement brought about by the litigation is expected to lower the co-op's annual tax bill by more than $180,000 starting in 2013.
American Crystal has also established itself as a major political donor.
According to the website opensecrets.org, the co-op's political action committee routinely spent between $300,000 and $600,000 each election cycle through the early 2000s.
That spending leapt to $2.1 million during the 2008 election cycle, according to opensecrets.org.