USDA: No actions expected under Feedstock Flexibility Program

By Erin Voegele | October 02, 2019

The USDA’s Commodity Credit Corp. announced Sept. 27 that it does not expect to purchase and sell sugar under the Feedstock Flexibility Program for crop year 2019, which coincides with fiscal year 2020.

The CCC is required to announce quarterly estimates of sugar to be purchased for the FFP based on crop and consumption forecasts.

Under federal law, processors of sugar beets and domestically grown sugarcane can obtain USDA loans when the harvest begins. The loans provide interim financing so that commodities can be stored after harvests, when prices are typically low, and be sold later, when prices are higher. When the nine-month loan matures, the processor can repay the loan in full or forfeit the collateral sugar to the USDA.

The FFP was reauthorized in the 2018 Farm Bill as an option to avoid sugar forfeitures. The program encourages the domestic production of certain biofuels, including ethanol, butanol and other marketable biofuels, from surplus sugar. The USDA sold surplus sugar to bioenergy producers in 2013 under the program.

In its announcement, the CCC said the USDA’s Sept. 12 World Agricultural Supply and Demand Estimates report projects that fiscal year 2019 U.S. ending sugar stocks are unlikely to lead to forfeitures next year. Therefore, the USDA does not expect to purchase and sell sugar under the FFP for crop year 2019.

The agency is expected to issue its next quarterly estimate regarding FFP on or before Jan. 1, 2020.