The Sugar Beet Fiasco

Fred H. Vahlsing, Sr. and his son, Fred H. Vahlsing, Jr. played a significant role in shaping the potato industry in Easton, Maine from the 1930s to today. Vahlsing, Sr. was originally from New Jersey. His agent Alfred Litz told him of the potential profits in the potato business in Aroostook County in the late 1920s. In 1930, F.H. Vahlsing Company was established in Easton. F.H. Vahlsing Company bought potatoes from farmers and sold them to buyers in big cities like Boston and New York. The farmers would bring their potatoes to potato houses that sat along the side of railroad spurs also known as sidings. The farmers would unload their trucks or wagons and store the potatoes in the potato houses. The trains would then pick up the potatoes at the potato houses and take them to the buyers in larger cities. Over time, tractor and trailers took the place of trains for hauling potatoes to distant markers. Today that still happens, but some farmers also send their potatoes to McCains to be made into French fries or contract with other companies that turn potatoes into other products such as potato chips.  Without the Vahlsings, the McCains and Huber buildings would not exist today as they are.  

Figure 3: This postcard to the right shows farmers bringing potatoes to potato houses in Caribou. On the other side of these potato houses were railroad tracks.

Fred Vahlsing, Jr. worked with his father to expand their potato business. He encouraged farmers to grow Russet potatoes and actively supported and encouraged more potato production in the state. He believed that Maine was the best place in the U.S. to grow potatoes. In the early 1960s, he built a potato processing plant in Easton, Maine. By doing this, he no longer had to ship potatoes to buyers in larger cities which was always risky. Sometimes, railroad cars of potatoes could become lost in the shuffle at major railroad yards and rot in the heat, according to Richard Kneeland of Easton who was also a potato broker at one time.

Fred H. Vahlsing, Jr. was highly motivated and dedicated to his potato processing plant, not solely for financial gain but also to prove that he could do it. He designed the plant, oversaw its construction, and opened its doors in July 1961.

Vahlsing and his employees worked to improve production and packaging in the plant. By 1971, he had four French fry processing related patents with his name on them.

Figure 7: The video to the right explains how French fries are made. While this video was made years after Vahlsing completed his patents, the Vahlsing patents are cited in multiple other patents dealing with current ways of processing French fries.

Vahlsing, Jr's prominence in the potato industry reached beyond Aroostook County and was recognized by the state and federal government, as they provided him with loans for his potato processing plant. He was known as a figure who could get things done. It was this reputation that led to his involvement in sugar beets in Aroostook County.

Since the 1940s, the amount of potatoes grown and the price of potatoes had fluctuated. Leaders discussed alternative crops to potatoes. In the early 1960s, there was debate in Maine over the planting of sugar beets as an alternative crop to potatoes. Senator Edmund Muskie and Congressman Clifford G. McIntire pushed for the planting of sugar beets in Aroostook County. They based their opinion of the productivity of beets on test cases done by the University of Maine Department of Agronomy.

Figure 8: The video to the fight explains how sugar beets are processed into sugar today.

However, not all agreed with this idea that sugar beets could be profitable in Maine. Frank W. Hussey, Deputy Administrator for Commodity Operations for the USDA, warned that beets might not be a good choice of crop to grow in the area. Despite this, Muskie and McIntire secured one of the fourteen allotments for sugar beet production from the United States Department of Agriculture (USDA) in 1964. The USDA allows only a certain amount of a crop to be grown in certain areas to make sure that the market is not flooded with the crop causing prices to go down. This is called an allotment and this is why Senator Muskie had to secure an allotment to grow sugar beets in Maine.

When Great Western Sugar Company, a national leader in sugar beet production and processing, pulled out of the project because it feared it could not make money, Fred H. Vahlsing, Jr., by then executive vice president of Vahlsing, Inc., formed Maine Sugar Industries (MSI) to build a refinery. MSI contracted for the first beets in 1966, processed the sugar beets into sugar, and supposedly supported farming operations within a short period of time. The sugar beet refinery was built in the same area as the potato processing center that Vahlsing, Inc. owned.

 Click here  to go to the Senator Edmund Muskie Archives to learn about the intricacies of sugar beet production in Aroostook County.

Maine Sugar Industries (MSI) contracted with farmers to grow the first sugar beets in 1966. This was within the time limits set by the USDA for the sugar allotment. The company's owner, Vahlsing Jr., built a sugar refinery and set up long-term leasing programs for farmers who purchased machinery required for planting and harvesting sugar beets. The financing was done through MSI. Sugar beets were planted around the state as far away as Farmington to meet the quota of 33,000 acres of sugar beets that the USDA had established. Maine farmers had to grow that many acres of sugar beets to keep the allotment the USDA had given them. In the first two years, it seemed possible.

Figure 10: The article to the right explains how Vahlsing and others offered farmers bonuses to grow sugar beets in 1967.

By 1968, MSI under Vahlsing contracted with farmers to grow 30,000 acres of beets in Maine and another 3,300 in New York. As a result, opponents questioned whether Maine had met its quota that year because they had to rely on sugar beets grown in New York. In 1969, Aroostook farmers had not met the full quota of 33,000 acres for sugar beets, and Maine Sugar Industries (MSI) struggled to persuade farmers to grow more.

By 1970 Muskie and others clearly realized that Aroostook County farmers could only produce the marginal yields previously predicted by the original opponents of Maine sugar beet farming. Sugar beets were affected by weather just as much as potatoes, and farmers were only able to raise low yields on most of the land. Some in the USDA warned that if Maine did not increase its acreage, its allocation would be given to another state, which would hurt the refinery and farmers.

In December 1970, the financial troubles of Maine Sugar Industries (MSI) and its owner, Vahlsing Jr., led to the involuntary bankruptcy of the company. This resulted in a bankruptcy restraining order that left beets already loaded on rail cars to rot, while MSI was charged $1,200 a day for freight costs. The restraining order cut off all financing to MSI, which led to the layoff of all employees except for a minimum maintenance force. The complexity of the bankruptcy of MSI grew out of the fact that it had three mortgages held against it. The Maine Industrial Building Authority (MIBA) took possession of the MSI refinery in 1971 and immediately began searching for someone to lease or purchase it.

Figure 11: This  December 21, 1972, Bangor Daily News  article questioned the legality of Vahlsing's dealings in order to maintain control of his buildings in Easton, ME.

In 1972, MIBA rented the refinery with the option to buy it to the Magnum Northern Sugar Corporation, a subsidiary of Vahlsing Inc, which was also facing financial troubles. The state government formed a subcommittee to investigate the relationship between MSI, Magnum Northern Sugar Corporation, and MIBA. The subcommittee visited the refinery and was appalled to discover missing machinery and damages that would cost $20,000 to fix.

Even though the plant was not operational, Magnum Northern Sugar Corporation rented the plant so that Vahlsing could keep ties to it with the hope of eventually purchasing for a lot less than what it was worth. Discussions were held in the newspaper, subcommittee hearings and in the courts over the fate of the plant. Many were opposed to the deal between MIDA and Magnum Northern Sugar Corporation. MIBA defended its decision stating that it had to be done to cover the monthly expenses of keeping the utilities on in the plant. However, in January 1973, MIBA severed its ties with Magnum Northern Sugar Corporation claiming that it did not have enough capital to make the plant operational much less purchase the plant and, consequently, it would look for other buyers. In addition, there had been times when Magnum Northern Sugar Corporation had not covered insurance or utilities costs as agreed to in its rental agreement with MIBA.

In 1973, the MIBA struggled to find a buyer for the sugar beet processing plant. Several east coast sugar companies were contacted, but none were interested in purchasing the plant. The plant was considered not viable by Atlantic Sugar Refineries Company of St. John, New Brunswick. By late 1974, a Maine potato farmer proposed that farmers form a cooperative to purchase the refinery from Maine Guarantee Authority or MGA (formerly MIBA) for a low price. The farmers' cooperative would work with a professional operator to renovate the plant and operate it for three to five years lease-free, with profits being shared by the cooperative and the operator. By January 1976, Maine farmers finally succeeded in purchasing the sugar beet processing plant that had been owned by Vahlsing's Maine Sugar Industries. The farmers formed a corporation called Triple A Sugar Corporation. The corporation consisted of the Pine Tree Sugar Beet Growers formed by Aroostook County farmers who owned 40% of the plant and who would grow the beets, Austrian firm Patzenhofer who owned 30% of the plant and managed the day-to-day operations of the equipment and processing, and ACLI, a New York commodity brokerage firm who owned the other 30% of the plant and whose job it was to market the beets.

The Triple A Sugar Corporation worked hard to make the sugar beet refinery in Easton a success but unfortunately it did not succeed. Once again, either farmers could not put enough acreage into beets or bad weather hurt the crop that was grown. By February 1978, the Triple A Sugar Corporation began bankruptcy proceedings due to staggering losses and debt. In the end, a Quebec refinery purchased the equipment, dismantled it and relocated it to their plant in Quebec. The failure of Triple A Sugar Corporation ended the experimentation with sugar beets in Aroostook County.