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A Candy-Coated Bailout for the Sugar Industry


While the sequester might slow down meat safety inspections, U.S. sugar producers are about to see an influx of cash from the USDA.

According to the Wall Street Journal, sugar beet and cane processors may see some relief to the tune of a 400,000-ton purchase of sugar from the USDA to help the companies repay outstanding loans that were supplied by the agency. "The USDA makes loans to sugar processors annually as part of a program that is rooted in the 1934 Sugar Act. The loans are secured with some 4.1 billion pounds, or 2.05 million tons, of sugar that companies expect to produce from the current harvest. That comes to almost a quarter of total U.S. output that the USDA forecasts for this year."

The loan programs cost US taxpayers hundreds of millions of dollars each year. The Wall Street Journal reported, "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 US economy at $700 million in 1996 and $900 million in 1998." And just since October, US sugar companies have borrowed more than $850 million.

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From the Organic Authority Files

While the decision is still pending, there's a chance that sugar prices could self-adjust before the final decision, expected as early as April 1, avoiding the need for the bailout, which would impact consumers with higher prices on popular items containing the sugar products. According to the National Confectioners Association, which represents 350 of the leading candy companies, the US Sugar Program has already cost consumers nearly $14 billion since 2008's Farm Bill was passed.

Keep in touch with Jill on Twitter @jillettinger

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