USDA: No FY 2018 actions under Feedstock Flexibility Program

By Erin Voegele | December 28, 2017

On Dec. 28, USDA Commodity Credit Corp. announced it does not expect to purchase sugar under the Feedstock Flexibility Program for fiscal year (FY) 2018. The CCC is required to announce quarterly estimates of sugar to be purchased for the FFP based on crop and consumption forecasts.

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 Dec. 28 announcement, the USDA cited its Dec. 12 World Agricultural Supply and Demand Estimates report, which predicts FY 2018 U.S. ending sugar stocks are unlikely to lead to forfeitures. As a result, the USDA does not currently expect to purchase and sell sugar under the FFP for FY 2018. The USDA is expected to release it next quarterly estimate regarding the FFP by April 1.