The U.S. Department of Agriculture’s (USDA) Commodity Credit Corporation (CCC) does not expect to purchase or sell sugar under the Feedstock Flexibility Program for crop year 2021 due to the unlikelihood of government purchase in lieu of loan repayments.
The USDA found in their World Agricultural Supply and Demand Estimates that the stock-to-use ratio of sugar was stable enough to predict borrowers risk of loan forfeiture would not be an issue for crop year 2021, which runs from Oct. 1, 2021, to Sept. 30, 2022, a USDA press release said.
“USDA will closely monitor domestic sugar stocks, consumption, imports, and other sugar market variables on an ongoing basis and will continue to administer the sugar program as transparently as possible using the latest available data,” the release said. “The next quarterly estimate regarding the Feedstock Flexibility Program will occur on or before April 1, 2022.”
Under federal law, sugar processors can obtain loans from the USDA with maturities of up to nine months when the sugarcane or sugar beet harvest begins, the release said. On maturity, the borrower may either repay the loan in full or forfeit their produce to satisfy the loan. The Feedstock Flexibility Program was first authorized in the 2008 Farm Bill and then later reauthorized under the 2018 Farm Bill as an option to avoid these forfeitures.
“Under the Feedstock Flexibility Program, if USDA is faced with the likelihood of loan forfeitures, it is required to purchase surplus sugar and sell it to bioenergy producers to reduce the surplus in the food use market and support sugar prices,” the release said.
Federal law requires the CCC to make quarterly announcements of sugar transactions under the Feedstock Flexibility Program based on crop and consumption forecasts, the release said.
