Washington — The USDA purchased 272 million pounds of sugar from processors yesterday, Sept. 30, to prevent them from defaulting on more than $200 million in government loans. The agency paid about $69.5 million for the sugar and sold it to ethanol producers for approximately $12.6 million, losing $53.3 million.
Several similar moves to relieve the sugar glut were made earlier in the summer, costing the agency about $88 million. It exchanged most of that sugar for import credits, which the USDA said prevented 381,000 tons of sugar from entering the country. The agency sold a small portion of the excess sugar to ethanol producers at a loss of $2.7 million.
“USDA is doing its part to manage the current sugar surplus, which is a direct result of America’s failed sugar policy. Only Congress can fix this program,” the Coalition for Sugar Reform says, encouraging its Congressional supporters to introduce reform during the coming weeks of the farm bill conference.
Good weather and expanded production in Mexico combined with a successful growing season in the U.S. contributed to the excess supply and record-low prices this year. Sugar ICE futures settled at 21 cents a pound Monday, Sept. 30, just 0.1 percent above the USDA's prediction that a price of 20.9 cents per pound would force a forfeiture.
Overall, the government has lent $1.2 billion to sugar processors throughout the fiscal year. As of Monday, about 20 percent of those loans remained outstanding. It is unclear whether processors defaulted on the loans, as the USDA is not reporting its activities today because of a government shutdown.