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USDA Announces Actions to Manage Domestic Sugar Surplus

Jun 19, 2013

The U.S. Department of Agriculture announced actions yesterday to manage the domestic sugar surplus to ensure that the federal sugar program continues operating at the least cost to the government. Record-breaking yields of sugar crops and a global surplus have driven down U.S. sugar prices, and USDA is required under the 2008 Farm Bill to act to stabilize the domestic market.

In March, USDA had considered purchasing 400,000 tons of sugar at a cost of $80 million taxpayer dollars because domestic sugar prices were not bouncing back from a slide of 18 percent. That purchase plan was designed to stop defaults by sugar processors participating in USDA's loan program.

Instead, USDA now plans to purchase sugar from domestic sugarcane or sugar beet processors and exchange them for credits under the Refined Sugar Re-export Program. This program allows refiners to export domestically produced refined sugar and later import raw sugar for refining and distribution into domestic and global markets. According to USDA, this option will cost approximately $38 million, which is one-third the expected cost of the loan forfeitures. In addition, it is not clear if this measure will stave off forfeitures.

“This cost to the taxpayer, even though less than purchases under forfeiture, still undercuts the argument that the sugar program operates at no net cost to the federal government,” said Clay Hough, IDFA senior group vice president.

IDFA opposes the current 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.

USDA also announced it would triple the amount of time – from 90 days to 270 days – that licensed refiners may make required exports or sugar transfers under the Refined Sugar Re-export Program. The extended timeframe will increase the pool of available re-export credits.

For more information, contact Clay Hough, IDFA senior group vice president, at chough@idfa.org.
 

 
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