USDA Proposes Sugar-For-Ethanol Purchase

WASHINGTONThe U.S. Department of Agriculture (USDA) last week sent a proposal to the White House Office of Information and Regulatory Affairs asking it to approve the sale of up to 400,000 tons of surplus sugar to ethanol producers under the 2008 Farm Bill Farm Bill Feedstock Flexibility Program. The White House has 90 days to review the proposed regulations, which if approved, would be the first time the sugar-for-ethanol program was enacted.

The program allows USDA to buy the surplus sugar and sell it to ethanol producers at a loss to keep prices from going below mandated levels. As reported by Reuters, large crops in the United States and Mexico have pushed sugar futures prices below the trigger price for potential forfeiture by processors of sugar to the government.

Were doing it because its the law," Agriculture Secretary Tom Vilsack said during an April 8 meeting with agricultural journalists. This is an issue where we have a significant oversupply and we have some issues that need to be resolved fairly quickly." Those issues include storage challenges and minimizing the cost to taxpayers.