Record high output, perilously low prices and a mountain of inventory are pushing Florida's sugar producers toward default on their federal crop loans for the first time since 1985, a move that could saddle U.S. taxpayers with millions of dollars worth of unwanted sugar.

''I think it is a likely event,'' said Bill Kramer, senior vice president and general manager of the Florida Sugar Cane Growers Cooperative in Belle Glade. ''We hate to see it happen. It's not the preferable route.''

Conditions in the U.S. market for sugar and sweeteners are so poor that the U.S. Department of Agriculture bought 132,000 tons of sugar last Tuesday just to lessen the effect of a crop forfeiture in August and September. By buying the sugar now, the government saved an estimated $6 million in handling costs from potential forfeitures.

But the government's $54.1 million purchase -- its biggest ever -- might not be able to stave off the inevitable. In today's glutted sweeteners market, sugar producers are receiving less than the 18 cents they owe for each pound of sugar. Interest tacks on nearly a penny per pound.

''Essentially, the break-even point is somewhere slightly above today's market, or about 19.6 cents,'' said Dalton Yancey, a Washington representative for Florida's sugar cane industry.

If loan defaults occur, they can be attributed to overproduction of sugar beets and sugar cane. The government's price-support program and low prices for other crops have steered farmers into sugar in recent years. This year, the increased planting and favorable weather are expected to produce a record 8.4 million tons of raw sugar.

No one can say how much exposure taxpayers face from a widespread default on sugar loans. Florida's producers along the southern rim of Lake Okeechobee have more than 470,000 tons of raw sugar under loan. A default on the entire amount would force the U.S. Commodity Credit Corp. to swallow about $169 million in sugar, but some portion of that tonnage has either been sold or is committed to buyers.

The ultimate cost to taxpayers would depend on the price the government fetches for the forfeited sugar. In the late 1970s, when sugar prices gyrated wildly, the government actually made money on sugar. But in 1985, when the government took ownership of 290,000 tons of Florida sugar, it lost $80 million on subsequent resales to China and a Louisiana ethanol producer.

Losing money on forfeited crops is a routine matter in Washington. In fiscal 1998, growers defaulted on $274.2 million worth of crop loans, or 4 percent of the total loans made. Wheat, corn and soybean producers were the biggest deadbeats.

It could be sugar's turn again. USDA estimates that the nation will have 1.94 million tons of raw sugar on hand on Sept. 30, said Dan Colacicco, a USDA sugar analyst. That would be about 300,000 tons higher than the September 1999 figure and would represent the biggest sugar inventory since 1978 -- and much of it was financed by federal crop loans, he said.

''There was a lot more cane put under loan this year, about three times as much as in the past several years,'' Colacicco said. ''Prices are so bad, mills want the option of forfeiting to the government.''

In Florida, the sugar companies owned by the Fanjul family of Palm Beach pledged 220,000 of its 710,000 tons of sugar to the loan program. Company spokesman Jorge Dominicis would not say how much of the 220,000 tons are spoken for in the market. He declined to speculate on the possibility of default.

''Anybody who has sugar under loan has an option of doing that,'' Dominicis said.

Florida's biggest sugar producer, U.S. Sugar of Clewiston, said only 60,000 tons of its 850,000-ton harvest are under loan -- and all under commitment to buyers. Nevertheless, the company, like its competitors, is examining ways to keep expenses down.

''Prices have stayed flat at 19 cents [per pound], which is a huge drop from where it was last year, at 22 cents,'' said Robert Buker, a U.S. Sugar senior vice president. ''It's going to force some people out of business if it keeps up.''

The Florida Sugar Cane Growers Co-op has about 200,000 tons of sugar under loan, more than half of its total output this past harvest. Kramer said ''some'' of it will be sold in the market, but wouldn't be more specific.

Florida's growers, in a consolidated bid through the Florida Sugar Marketing Terminal Association at the Port of Palm Beach, tried to tender up to 37,500 tons of raw sugar to the USDA last week, but was turned down.

''They wanted too much money for their raw,'' USDA spokesman Tim Murray said.

But since federal law requires the agency to minimize the cost of defaults and forfeitures to taxpayers, another sugar purchase could be in the works.

''I know they're considering it,'' Yancey said Thursday. ''I was over there this morning with the people who make commodity decisions, and they said they're working on it.''