Posted at 1:45 p.m. on March 13
“The U.S. Department of Agriculture is considering buying 400,000 tons of sugar…to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program,” according to the Wall Street Journal, as a “bumper crop of sugar beets in the upper Midwest and a big sugar cane harvest has sent U.S. prices tumbling.”
“The USDA makes loans to sugar processors annually as part of a program that is rooted in the 1934 Sugar Act… The domestic sugar industry has long relied on subsidies that critics say are disproportionate to its contribution to the U.S. economy… The loan program was designed to operate at no cost to taxpayers. A June 2000 study by the Government Accountability Office, then called the General Accounting Office, estimated the program’s cost to the U.S. economy at $700 million in 1996.”
“Any defaults on loans this year would be the first test of a provision in the 2008 Farm Bill that requires the USDA to sell forfeited sugar to ethanol producers.”
