USDA says it has no immediate plans to use sugar purchase program

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, April 1, 2014

The federal government has no immediate plans to use a program that allows it to purchase excess sugar in the market and sell it to ethanol producers.

The Agriculture Department announced Friday that the Feedstock Flexibility Program is unneeded in the third quarter of fiscal 2014 based on the price of sugar. Prices for both raw and refined U.S. sugar are trading above the levels that trigger the need for federal support, USDA said.USDA used the Feedstock Flexibility Program for the first time last year to help the sugar industry, which experienced price declines and defaulted on government loans. USDA’s Commodity Credit Corp., which operates the federal sugar support program, sold the sugar at heavy losses to biofuel producers (Greenwire, Oct. 1, 2013).The department said it would continue to evaluate the market.

“USDA will closely monitor stocks, consumption, imports, and all sugar market and program variables on an ongoing basis,” the department said in a statement. “USDA will continue to administer the sugar program as transparently as possible using the latest available data.”

Despite USDA’s prognosis about the sugar market, the American sugar industry says it continues to face heavy losses.

On Friday, American sugar producers filed a petition with the U.S. government to take action against the Mexican sugar industry, alleging that the Mexican industry, which is about 20 percent state-owned, has dumped heavily subsidized sugar into the U.S. market.

The American Sugar Alliance said Mexico’s sugar subsidies would cost U.S. producers almost $1 billion in the current crop year.

“We are more efficient than Mexico’s sugar industry and can compete with anyone in a free market,” said American Sugar Alliance spokesman Phillip Hayes, “but it is hard for U.S. farmers to succeed when a subsidized industry that is largely government-controlled is dumping its product.”

The Mexican government has disputed the claims in the petition. Critics of the U.S. sugar program, such as beverage makers, say U.S. government support keeps domestic prices artificially high.