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Eliminate Sugar Subsidy to Reduce Spending, Groups Tell USDA

Jun 25, 2010

A dozen organizations, including IDFA, this week commended the Obama administration for asking federal agencies to identify budget items they could cut to reduce departmental spending by five percent in fiscal year 2012. In a letter to Agriculture Secretary Tom Vilsack, the organizations suggested eliminating a wasteful and unnecessary sugar subsidy that would save taxpayers three-quarters of a billion dollars.

The subsidy comes from the Feedstock Flexibility Program, a measure included in the Food, Conservation and Energy Act of 2008. When a sugar surplus exists, the measure requires USDA to buy the surplus and sell it to ethanol plants as feedstock. Because the sugar costs more than corn, the ethanol plants refuse to buy the sugar without a subsidy. That means taxpayers end up paying the difference between the market price of sugar and the price that ethanol producers are willing to pay for it.

"If operational, the Feedstock Flexibility Program would deny domestic sugar that is needed for food and beverage manufacturing, saddle taxpayers with new costs and reduce the demand for U.S. corn," the letter states.

Although the program isn't operational today because domestic sugar supplies remain extremely tight, the Congressional Budget Office projects that USDA will spend $760 million on the program over a 10-year period starting in FY 2011.

IDFA and the other organizations offered to provide additional information that would help USDA to evaluate the program and reduce federal spending. The other groups are:

  • American Bakers Association
  • American Beverage Association
  • Competitive Enterprise Institute
  • Council for Citizens Against Government Waste
  • Everglades Trust
  • Independent Bakers Association
  • National Association of Manufacturers
  • National Confectioners Association
  • National Foreign Trade Counci
  • Sweetener Users Association
  • U.S. Chamber of Commerce

Read the letter here.

For more information, contact Jerry Slominski, IDFA senior vice president of legislative affairs and economic policy, at


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