USDA: No actions expected under Feedstock Flexibility Program

By Erin Voegele | January 02, 2017

On Dec. 28, the USDA Commodity Credit Corp. announced it does not expect to purchase and sell sugar under the Feedstock Flexibility Program during fiscal year 2017.

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.

In its announcement, the USDA cited its Dec. 9 World Agricultural Supply and Demand Estimates report, which projects that domestic fiscal year 2017 ending sugar stocks are unlikely to lead to forfeitures. Therefore, the USDA not expect to purchase and sell sugar under the Feedstock Flexibility Program in fiscal year 2017.

The USDA is scheduled to issue its next quarterly update on the program prior to April 1.