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WASHINGTON, April 7 (Reuters) - U.S. sugar industry officials
say they are cautiously optimistic the federal government will buy
up to 350,000 short tons of sugar to avoid larger loan forfeitures
later this year.
Senators from sugar-producing states met U.S. Agriculture
Secretary Dan Glickman for a second time on Thursday to discuss
government purchases. White House Chief of Staff John Podesta also
attended the meeting.
An announcement could come as early as next week, one sugar
industry aide said, noting that sugar beet farmers on the West
Coast must decide soon whether to plant a crop this year.
The issue is critical because two sugar beet processing
facilities in California and one in Washington are on the brink of
collapse and a decision by farmers not to plant could be the final
blow, the industry aide said.
At current prices, sugar processors could forfeit somewhere in
the range of 600,000 tons of sugar this year under the U.S.
government loan program, an Agriculture Department aide said.
Processors have placed about 1.4 million tons of sugar under
the loan program. Loans come due for about 60,000 tons at the end
of July; 270,000 tons at the end of August; and more than 1
million tons at the end of September.
Processors can only forfeit loans when they mature.
The Agriculture Department estimates loan forfeitures are
likely when raw cane sugar prices fall below 20 cents per lb in
Florida and Louisiana and 21 cents in Hawaii.
Current futures prices for U.S. sugar are about 19 cents a lb,
having recovered from a dip below 17 cents.
To boost prices back above the loan rate and avoid larger loan
forfeitures later this year, sugar producers want the department
to buy about 350,000 tons and dispose of it through ``non-food''
uses or by donating it overseas.
Department officials are unenthusiastic about the second option
because there is already a glut of sugar on the world market and
U.S. donation programs have traditionally been aimed at helping
countries meet basic food needs.
However, the department may be able to sell the sugar to
ethanol producers at about 3 to 5 cents per lb so it can be
blended with other feed stocks, such as corn.
The loss on such a sale could exceed $100 million, but that
would still be cheaper than donating the sugar overseas and paying
for transportation costs, the department official said.
Sugar growers argue the cost of purchases would be modest
compared to $64 billion other farmers have received under the 1996
farm bill and subsequent legislation.
Unlike corn, cotton and wheat producers, sugar farmers receive
no direct payments from the government.
Instead, the government has restricted imports to keep U.S.
prices above the loan rate.
That mechanism has lost some effectiveness because of low world
sugar prices and the North American Free Trade Agreement, which
has given Mexico increased access to the U.S. market. |