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USDA has a payment-in-kind (PIK) program for sugar beet producers
under consideration. It would be used to reduce production in fiscal
2001. August Schumacher, Jr., under secretary at USDA, told the
Senate Agriculture Committee that appears to be "the most
feasible use of surplus sugar."
"USDA has analyzed many potential outlets for the surplus
sugar, but most have serious disadvantages or limitations," he
said. "Foreign donation, ethanol and restricted use sales are
possible but either expensive or reduce the price of other
commodities with already depressed prices."
The department, through the Commodity Credit Corporation, can use
existing authority to accept bids from producers for the conversion
of planted acres to diverted acres in return for PIK payments from
CCC sugar stocks, Schumacher explained.
If nonrecourse loans are mandated in fiscal 2001, a PIK program
may save CCC more than the cost of the purchases, he continued. PIK
payments are limited by statute to $20,000 per year per person but
are not aggregated in the other payment limitations. "A sugar
PIK program is not expected to solve the oversupply problem for the
domestic industry because the program would be limited by the
availability of CCC inventories and the payment limitation severely
limits the number of acres that can be diverted per farm. Also, the
planted acres are under contract to processors who may not be
willing to forego the production," said Schumacher.
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