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October 11, 2013

USDA Again Sells Sugar At A Loss

Heidi

On September 30, 2013, the U.S. Department of Agriculture (USDA) announced it had completed its second sale of sugar under the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) Feedstock Flexibility Program (FFP). Reportedly, USDA purchased the sugar for $65.9 million and sold it immediately for $12.6 million, a $53.3 million loss. Currently, no information is available about the sale on USDA's website because the website is suspended during the government shutdown.


The 2008 Farm Bill, which expired on September 30, directs USDA to keep sugar prices at or above certain levels, and authorizes USDA either to acquire sugar through forfeiture of sugar loans made by the USDA's Commodity Credit Corporation or to buy sugar and sell it to bioenergy producers until prices raise to those levels. Domestic sugar prices have been falling this year.


USDA was criticized for its first sale of sugar as part of the FFP because in that instance USDA had purchased 7,118 short tons of refined beet sugar for $3.6 million and sold it to renewable fuel producer Front Range Energy for $900,000 (a loss of $2.7 million).