U.S. sugar industry looks to taxpayers for loan bailout

The U.S. Department of Agriculture may soon purchase 400,000 tons of sugar at a cost of $80 million…

The U.S. Department of Agriculture may soon purchase 400,000 tons of sugar at a cost of $80 million taxpayer dollars unless domestic sugar prices bounce back from a five-month slide of 18 percent. The purchase plan is designed to stop a series of defaults by sugar processors participating in USDA's loan program.

“This cost to the taxpayer undercuts the argument that the sugar program is operated at no net cost,” said Clay Hough, IDFA senior group vice president.

"The current volatility in the U.S. sugar market and the potential for loan forfeitures are the direct result of an outdated and unbalanced U.S. sugar policy, which USDA is forced by law to administer," said the Sweetener Users Association (SUA) in a statement issued on Friday.

"In 2008, Congress passed a farm bill, which severely restricted USDA's flexibility in administering the sugar program. The market-distorting sugar provisions included in the bill sent U.S. refined sugar prices soaring to previously unheard-of levels and created short supplies over the past four years, and are now responsible for excess sugar on the market and the prospect of loan forfeitures," SUA said.

In the statement, SUA commended Under Secretary Michael Scuse and others at USDA for working to achieve greater balance, transparency and clarity in the federal sugar program. The group urged Congress to reform U.S. sugar policy to give USDA more flexibility and to ensure that the policy works for sugar users, producers and consumers.

The decision to intervene in the market could come as early as April, said a USDA spokesperson.