USDA: No FY 2017 sugar purchases expected under FFP

By Erin Voegele | September 16, 2016

In early September, 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 Aug. 12 World Agricultural Supply and Demand Estimates report, which projected that domestic fiscal year 2016 ending sugar stocks are unlikely to lead to forfeitures.

The USDA is expected to issue the next quarterly estimate regarding the Feedstock Flexibility Program prior to Jan. 1.