The U.S. Department of Agriculture announced last week that it had accepted 85,000 tons of sugar as payment for $34.6 million in loans by U.S. sugar processors. Although sugar forfeitures haven’t happened since 2004, atypical market conditions have forced USDA to take a number of actions this crop year to manage the sugar supply, including purchasing a little more than 7,000 tons last month under the Feedstock Flexibility Program.
Congress created the FFP in the 2008 Farm Bill, allowing the government to purchase excess sugar and sell it for ethanol production as a way to help sugar processors avoid forfeiting on short-term loans from USDA’s Commodity Credit Corporation.
“This supposed no-net-cost-to-taxpayers sugar program has cost USDA $90 million since July,” said Clay Hough, IDFA senior group vice president. “This is what happens with federal policy and programs that interfere with the market.”
IDFA opposes the U.S. sugar program because it manipulates sugar supplies, creating unnecessary instability in sugar markets. The program also leads to higher costs for processors and increased prices for consumers and represents unnecessary and inefficient governmental intrusion into private sector buying, selling and importing decisions.
Millions of dollars more in taxpayer costs are expected in the coming months, according to the Coalition for Sugar Reform, of which IDFA is a member. Another $307 million in sugar loans come due at the end of September.
The Congressional Budget Office projects additional taxpayer costs of $239 million during the next several years, and one analyst has forecast taxpayer costs of more than $200 million during 2013 and 2014 alone. In addition, the federal sugar program costs consumers and businesses as much as $3.5 billion a year in the form of a hidden tax and puts 600,000 American manufacturing jobs at risk.
The Coalition recently called for legislative action, saying, “While USDA is doing a commendable job in exercising all available options to minimize taxpayer costs, only Congress can fix this program, and we urge them to do so this year.”
Also last week, USDA announced the initial overall allotment quantities (OAQ) for sugar in fiscal year 2014. The OAQ determines the amount of sugar beet and sugar cane that domestic producers are allowed to market. For the coming fiscal year, the OAQ has been set at 9,843,000 short tons, raw value (STRV), the minimum level required by law.
For more information, contact Beth Hughes, IDFA director of international affairs, at email@example.com.