USDA: No actions expected under Feedstock Flexibility Program

By Erin Voegele | January 05, 2016

On Dec. 30, the USDA's Commodity Credit Corp. announced it does not expect to purchase sugar under the Feedstock Flexibility Program for Bioenergy Producers during the first quarter of this year. The USDA is required to announce quarterly estimates of sugar to be purchased under the program based on crop and consumption forecasts.

In its announcement, the USDA explains federal law allows sugar processors to obtain loans from USDA with maturities of up to nine months from when the sugarcane or sugar beet harvest begins. Upon loan maturity, the sugar processor may repay the loan in full or forfeit the collateral to USDA to satisfy the loan.

According to the USDA, its December World Agricultural Supply and Demand Estimates Report projects that domestic fiscal year 2016 ending sugar stocks are unlikely to lead to forfeitures. That report predicted U.S. sugar production for 2015-’16 will reach 8.99 million short tons raw value (STRV), up 181,104 STRV over the previous month. Imports from Mexico were reduced by 207,902 STRV to 1.33 million. Ending stock are projected at 1.66 million STRV.

The Feedstock Flexibility Program was reauthorized in the 2014 Farm Bill and encourages the domestic production of biofuels, including ethanol, butanol and other marketable biofuels, from surplus sugar. In 2013, the USDA sold surplus sugar to bioenergy producers under the program.

The department is expected to issue its next quarterly estimate under the program prior to April 1.