Surplus sugar is one step closer to entering the U.S. biofuels industry as feedstock. The USDA Farm Service Agency recently published a notice soliciting bids under the Feedstock Flexibility Program for Bioenergy Producers. The program encourages domestic production of biofuels from surplus sugar.
Information published by the USDA explains that the program was created by Congress in the 2008 Farm Bill. It essentially requires the USDA to purchase sugar and sell it as feedstock to bioenergy producers in order to avoid forfeiture of sugar pledged as collateral by processors when securing nonrecourse community loans from the Commodity Credit Corp. The USDA further explains that federal law allows sugar producers to obtain loans from the CCC with maturities of up to nine months at the beginning of the crop year. When the loan matures, the sugar processor may repay the loan or forfeit the sugar used as collateral. According to the USDA, the last time forfeitures occurred was in 2004, but atypical market conditions have caused it to take action this year to avoid forfeitures.
Within the announcement, the USDA FSA specifies that any sugar purchased by the CCC under the Feedstock Flexibility Program will be sold on a competitive basis to bioenergy producers. That sugar must be used to produce biofuel. A fact sheet published by the USDA FSA in August specifies that bioenergy producers buying sugar under the program must take possession of the sugar no more than 30 days from the date of the CCC’s purchase.
According to the notice, quantify offers are due by 1:30 p.m. CT on Aug. 21. By 6:30 p.m. that same day, a catalog listing with all offered quantities will be available on the FSA website here. Price offers will be due on Aug. 28, and the CCC will notify those with successful offers the following day.
Additional information on the Feedstock Flexibility Program final rule, which was published in July, and the program’s expected impact on ethanol production, is available here.