American sugar cooperative
The Western Sugar Cooperative is a grower owned American agricultural cooperative originating from the Great Western Sugar Company in 1901.
Great Western Sugar Company History.
The Great Western Sugar Company was incorporated in February 1901 by Charles Boettcher and others including John F. Campion, after having difficulty making their Colorado Sugar Manufacturing Company factory in Grand Junction, Colorado a success and selling it to locals. Colorado Sugar had an agreement to build a plant in Loveland, Colorado in 1899, with the Utah Sugar Company eyeing expansion into Colorado, and Colorado Sugar lacking resources to follow through quickly, they gave their Loveland agreement to Great Western. Great Western brought in other high-level investors (Eben Smith, David Moffat, William Jackson Palmer, James Joseph Brown), created the Great Western Construction Company, then had the subsidiary build their first sugar beet processing plant, opening on November 21, 1901. The first year was a failure, both for beet quality and problems at the factory, so they hired Mark Austin from Utah Sugar to improve their situation.
Great Western created the Great Western Railway subsidiary in 1902, which allowed an expansion of the territory a beet sugar factory could collect from. Great Western also created the Loveland Construction Company, which built the railway, primarily with Japanese workers. By 1976 the railway had of track, all standard gauge.
Rounds of price wars with the Sugar Trust in 1900-1902 eliminated Great Western's Colorado competitors, and the Trust acquired control of Great Western by 1904. The Trust set prices, trained factories and farmers, assigned plants and farmers to regional "beet districts" to prevent plants from competing against each other with the farmers, but left the factories independent to conduct other business. In 1905 Great Western was reestablished as a New Jersey corporation and acquired four Colorado factories.
Colorado was the largest producer of beet sugar by 1906. By 1926 there were a total of 17 factories, including 13 from Great Western.
Starting at its creation in 1901 Great Western brought in families of Germans from Russia, who had experience with sugar beet farming; single Japanese men, until immigration restrictions eliminated them in 1907; and, Mexican workers to help with the labors of sugar beet farming. The Germans from Russia were preferred for their experience at producing high beet yields. Their upward mobility, not afforded to Hispanic workers, meant they contributed less in the labor pool. By the 1910s and the 1920s the Hispanic/Mexican farmworkers had taken over the need for beet labor.
Great Western cut contract prices to farmers in the 1910s and 1920s, leading to the "Loveland Resolutions" accord by farmers associations against the company. Colorado passed the Cooperative Marketing Law in 1923, allowing co-ops as legal entities. This allowed farmers to present a united front and raise the contract prices of beets. This, fewer farmers planting beets, and curly top disease lowering yields caused Great Western to create a profit-sharing contract, splitting the profits from selling the sugar 50-50. This became standard for the industry.
The Great Depression in 1929 substantially reduced both demand and prices, nearly ruining the industry. Tariffs were passed, which did not help. The Sugar Trust lobbied and got included in the Agricultural Adjustment Act (AAA) through the Jones–Costigan amendment. This reduced imports and set base prices on sugar. The Dust Bowl continued the interwar period traumas to the industry. Some farmers were protected from drought per the Colorado-Big Thompson Project, created through farm and industry lobbying.
World War II brought an end to the Depression and drought, and brought back consumer demand. The lack of labor incentivized change: more reliable seeds were developed, which meant labor-intensive thinning and blocking was unnecessary and mechanical harvesting was perfected becoming rapidly adopted. However, AAA kept a cap on prices and profitability, hindering recovery. A long drought also hit in the 1950s.
During the war, Great Western sought employees from the Heart Mountain Japanese American internment camp. An announcement on 2 April 1943 described "choice contracts" for Heart Mountain workers, and a quarter-page Great Western ad in September 1943 discussed pricing, transportation, and said "Many farmers need help to harvest the sugar beet crop. You will be welcomed by the public and your efforts will be appreciated." During the 1942-1945 seasons, Japanese American laborers brought in 20% of the sugar beet crop in the nation, despite deep hatred and racism. After the war, Great Western offered relocation to families to work as laborers in near Billings and Lovell.
A byproduct of the process was molasses that could not be crystallized into sugar. This was used as food, sold as livestock feed, or distilled into alcohol. Beginning in the 1950s, it was put through the Steffen process to produce monosodium glutamate (MSG). Great Western had one MSG plant in Fort Collins.
In 1965, William M. White Jr., at age 25, was a vice president at Allen &amp; Company. Invited back to Colorado from New York by James A. Krentler, the two acquired Denver's Colorado Milling and Elevator Company (established 1885) in that year, then used that to take over Great Western in 1968. Great Western merged with Colorado Milling and became Great Western United Corporation with White as the president. Colorado Milling and Elevator was sold in 1967 or 1969 to Peavey Flour Co. White Jr. was the fourth generation of his family to be involved with Great Western, and his father was a director at the time of the takeover. White Jr. described the merged company as "big enough to do anything we want". Robert R. Owen joined that year as the Great Western Sugar president, coming from Ford Motors. He remained president until 1971. The Colorado City, Colorado and California City, California land developments, both part of Nathan "Nat" K. Mendelsohn's California City Development Company, were added in 1968, becoming Great Western Cities, with Mendelsohn joining Great Western. For various reasons, all of these companies struggled in 1969-1970.
White acquired the Emerald Christmas Tree Company, which grew Christmas trees and distributed and sold them, prepackaged, to retailers. It was acquired in 1968 for $1.5 million. It then lost $1 million in its first year and was sold for a loss in 1970. Colorado Milling was also sold in 1970 for $10 million, also at a loss.
Timothy Wirth, a vice president of Great Western Cities, described White reading "Future Shock" in 1970 and then sending copies to company directors to bridge the gap between the "very young management" and the older management.
By the 1970s, "The New York Times" described Great Western as a "house of cards". In 1971 White had canceled cash dividends a month after promising at the annual meeting to not do so. This broke a nearly 40-year streak of dividends being paid at the company. White was willing to sell Colorado Milling and Great Western Sugar, but was dismissed as CEO in 1971, much of it through Mendelsohn's efforts. As the largest preferred shareholder, Mendelsohn launched a proxy fight for the company in 1972 to replace the directors and prevent the company from being split up.
GWU's stock price dropped by more than a factor of 10 between late 1971 and mid-1973. Investigations of price fixing by six sugar producers including Great Western closed in 1974 with criminal indictments; the Justice Department and Council on Wage and Price Stability also investigated why prices had spiked 300-400% in 1974.
Hunt International Resources acquired Great Western in late 1974 as a hostile takeover as the price fixing indictments came in, as the Hunt brothers attempted to corner the sugar market. They owned a combined 65% of the outstanding stock by 1976. They then removed the board of directors and executive leadership and moved the executive offices to the First National Bank Tower in Dallas, Texas, leaving the corporate office in Denver. They also added two lines of business: commodities trading and oil and gas exploration and development.
Sugar prices remained high in 1975 even after the price fixing indictments were issued, even though the United States Sugar Act of 1937, which removed import quotas, also expired in 1974. Prices then began to deflate rapidly. By 1977 the industry was asking for government subsidies after the price deflation.
In June 1975, GWU acquired Godchaux-Henderson Sugar, a cane sugar producer in New Orleans, from Southern Industries Corporation for $2.65 million cash, as well as making agreements on unsecured notes. This included their cane refinery in Reserve, Louisiana, which processed cane from local fields and from overseas, and a deepwater dock that was completed in 1973. In 1975-1976 they had contracts for raw cane from Corporation Azucarera La Victoria of Panama and the Philippine Exchange Company. GWU and Southern Industries sued each other in 1976 over the notes.
The Rocky Mountain Beet Growers Association formed in 1971, and was later known as the Great Western Producers Co-Operative. Robert R. Owen, formerly Great Western Sugar's head until being demoted by White in 1971, became the co-op's head. As a farmers co-op, it attempted to buy the sugar division in 1971-1972 and again in 1973-1974 for $43.5 million. The 1974 effort failed after an increase in sugar prices led to record profits, which made the co-op's bid look undervalued. Great Western United sued in 1975 to void the contract and the co-op counterclaimed that United had failed to represent them accurately in proxy statements. The co-op lost the case in 1975, as well as on appeal in 1978 and on second appeal to the Colorado Supreme Court in 1980.
In 1984 three divisions were put for sale: Godchaux-Henderson Sugar Company (Reserve, Louisiana), the Northern Ohio Sugar Company and the Great Western Railway Company. Holly Sugar expressed interest in buying Northern Ohio and Godchaux-Henderson but talks fell through in June 1984. By 1985 Great Western was described as "one of the many trouble spots" in the Hunt group, and Great Western filed Chapter 11 bankruptcy in March 1985. Savannah Foods &amp; Industries purchased the Fremont, Ohio plant and Findlay, Ohio storage facility.
In 1985, Tate &amp; Lyle created the Western Sugar Company and purchased six of the factories: Greeley, Fort Morgan, Scottsbluff, Bayard, and Billings. They apparently also bought Loveland closed it down in 1985. By 2002 Western Sugar was still operating the Greeley and Fort Morgan factories.
In 2002, more than 1000 sugar beet growers purchased the company, creating the Rocky Mountain Sugar Growers Co-operative. Later that year it merged into the Western Sugar Cooperative.
The organization was headquartered in Denver. It has five factories, located at Fort Morgan, Colorado, Scottsbluff, Nebraska, Torrington and Lovell, Wyoming, and Billings, Montana.
In May 2015 the co-op announced it would be ending production at the Torrington site and would only use that site for storage. As such it plans to reduce the workforce at its Torrington site from 76 staffers to just 6. The changes were set to take effect late 2016, however as of early 2018 it is still fully operable.
By 1976, related subsidiaries of GWU included:
Leadership.
Frank A. Kemp was named CEO in 1936 and remained so until 1967. He was elected chairman of the board in 1966, and died in 1971. It was noted that out of his $534,000 estate, there were no stock holdings in Great Western.
William Mathews White Jr. (at age 28), became president in 1968 (after being head of Colorado Milling since 1965 until it was merged into GWU). In early 1967 White attempted to buy and merge Gorton's Fish into Colorado/GWU, acquiring 30 percent, but failed and sold the shares six months later.
White Jr., (born ca 1940), was the son of the wealthy William M. White (1911-7 September 1966), noted for founding many companies in Colorado, including White and Davis Department Store, the first in the state, and controlling several Colorado-based banks. William Jr. graduated from Yale in 1961 and joined Allen &amp; Company, becoming vice president by 1965 (at age 25). By 1972, in a Wall Street Journal describing his downfall, he was described as "a young kid who was copying the Lings and Perots, but didn't have in his bones an understanding of what they were doing." It described how he lost Krentler's support after White berated Mendelsohn and others in a contentious 1971 board meeting; Krentler said "Making fun of someone in front of people is not my idea of fun. Nat Mendelsohn is a human being. I can't stand to see human beings treated like that." The next day, the directors voted