WASHINGTON -- The U.S. Department of Agriculture today announced actions to manage the domestic sugar surplus, as required by law, while operating the sugar program at the least cost to the government. Record-breaking yields of sugar crops and a global surplus have driven down U.S. sugar prices and USDA is required to act to stabilize the domestic market. Today's actions are designed to manage the sugar program while minimizing federal sugar program expenditures.
First, USDA announced its intention to purchase sugar from domestic sugarcane or sugar beet processors and subsequently conduct voluntary exchanges for credits under the Refined Sugar Re-export Program. Exchanging sugar for credits reduces imports into the U.S., and is designed to reduce the sugar surplus. It is a less costly option than loan forfeitures. Since not less than 2.5 tons of import credits will be exchanged per 1 ton of sugar, there will be a minimum net reduction of 1.5 tons of sugar in the U.S. market per ton of sugar exchanged, making this a less costly option than forfeitures. USDA anticipates this action could remove around 300,000 tons of sugar from the U.S. market and cost approximately $38 million, subject to sequester, which is one-third the expected cost of forfeitures. USDA will continue to monitor current market conditions and projections to determine if additional actions are necessary.
Second, USDA says licensed refiners now have 270 days -- rather than 90 days -- to make required exports or sugar transfers under the Refined Sugar Re-export Program. This action increases the pool of available re-export credits, facilitating the exchange announced above. These temporary waivers make no permanent change to Re-export Program rules.
USDA will closely monitor stocks, consumption, imports and all sugar market and program variables. USDA will also, on an ongoing basis, evaluate the need for use of other tools authorized in the 2008 farm bill, including the Feedstock Flexibility Program.
