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USDA Announces Additional Actions to Manage the Domestic Sugar Surplus


WASHINGTON, June 17, 2013 - 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 today 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 announced today that 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.

Today’s announcements build on previous actions USDA has taken to stabilize the domestic sugar market. At the start of FY 2013, USDA announced at minimum allowable levels both the domestic Sugar Marketing Allotments and the U.S. WTO raw sugar import tariff-rate quota. On May 1, 2013, USDA announced two waivers of provisions in the Refined Sugar Re-export Program, temporarily permitting licensed refiners to transfer program sugar from their license to another refiner’s license through Sept. 30, 2013, and temporarily increasing their license limit from 50,000 metric tons raw value of credits to 100,000 metric tons raw value of credits, through Dec. 31, 2014.

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.

For additional details on the Refined Sugar Re-export Program changes announced today, please check the Federal Register notice here: Notice of Sugar Purchase and Exchange for Re-export Program Credits; and Notice of Re-export Program Time Period Extension. USDA’s Commodity Credit Corporation (CCC), managed by the Farm Service Agency, will invoke the Cost Reduction Options under the 1985 farm bill to purchase sugar. This CCC sugar will be offered to licensees who have credits under the Refined Sugar Re-export Program.

The Farm Service Agency’s invitation for U.S. sugarcane and sugar beet processors to sell sugar to CCC, and the invitation to exchange Re-export credits, can be found on the FSA Commodity Operations website at: www.fsa.usda.gov/FSA/webapp?area=home&subject=coop&topic=landing.

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