USDA: No third quarter sugar purchases expected under FFP

By Erin Voegele | July 13, 2016

The USDA Commodity Credit Corp. recently announced it does not expect to purchase sugar under the Feedstock Flexibility Program during the third quarter of this year.

Under federal law, processors of sugar beets and domestically grown sugarcane can obtain USDA loans when the harvest begins. The loans provide interim financing so that commodities can be stored after harvests, when prices are typically low, and be sold later, when prices are higher. When the nine-month loan matures, the processor can repay the loan in full or forfeit the collateral sugar to the USDA.

The FFP was reauthorized in the 2014 Farm Bill as an option to avoid sugar forfeitures. The program encourages the domestic production of certain 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 CCC is required to announce quarterly estimates of sugar to be purchased under the FFP based on crop and consumption forecasts. According to information released by the CCC on July 1, USDA’s June 10 World Agricultural Supply and Demand Estimates report projects that fiscal year 2016 U.S. ending sugar stocks are unlikely to lead to forfeitures.

The next quarterly estimate regarding the RRP is expected to occur on or before Sept. 1.