Government Considers Sugar Bailout Plan

With the nation awash in sugar, the government is preparing to give some of the surplus to farmers who pledge to destroy some of this fall’s crop. Officials at the U.S. Department of Agriculture said that’s the most feasible way to prop up domestic sugar prices at the least cost to taxpayers, although a final decision has not yet been made. Critics derided the idea as a desperate attempt to bail out growers, who are partly to blame for the surplus. Because of a steep drop in prices, growers have been threatening to forfeit to the government up to $500 million worth of sugar that’s currently pledged as collateral on federal marketing loans. USDA recently bought 132,000 tons of sugar at a cost of $54 million to avoid forfeitures this summer, but another 1.4 million tons are still under loan. Giving sugar to farmers to entice them to plow under part of this year’s crop will save the government on monthly storage costs, currently about $2 a ton, said USDA official August Schumacher. Farmers would not take possession of the sugar itself but would instead receive a “payment-in-kind” certificate that they could redeem for cash. Details of the proposed program have not been finalized. But USDA officials said they would have to act quickly on the certificate program since farmers are due to start harvesting sugar beets in September.