The Sugar Loan Program, administered by the Farm Service Agency (FSA), offers low-interest loans to sugar producers to help them manage cash flow during the harvest period. By allowing producers to store their sugar and delay selling until market conditions improve, the program supports more stable and profitable marketing strategies. Producers can repay the loan or forfeit the sugar as collateral to the Commodity Credit Corporation (CCC) if market prices remain unfavorable. This forfeiture option effectively sets a price floor, ensuring that producers can secure at least the loan amount for their sugar.
Program Features:
- Eligibility:
- Loans are available for sugar and in-process sugar beginning October 1 of each fiscal year.
- Loans mature at the earlier of:
- The end of the nine-month period starting the first day of the month after the loan is made.
- The end of the fiscal year in which the loan is made.
- If a loan is made in the last three months of a fiscal year (July, August, or September), the processor can re-pledge the sugar as collateral for a second loan (supplemental loan) in the next fiscal year.
- Requirements:
- Process sugar from domestically grown sugarcane or sugar beets.
- Compliance with highly erodible and wetlands regulations.
- Agree to the terms and conditions in the loan application.
- Execute a note, security agreement, and storage agreement with CCC.
- Loan Provisions:
- Loans provide interim financing, allowing producers to store production at harvest and market it more orderly throughout the year.
- Upon loan maturity, the sugar processor may repay the loan in full or forfeit the collateral (sugar) to USDA to satisfy the loan.
- Forfeiture provides a price floor for the crop, ensuring producers receive at least the loan proceeds.
Minimum Price Support:
- Sugarcane: Sugarcane processors must pay growers at least the minimum payments specified in the annual CCC loan rate news release.
- Sugar Beets: Minimum payments are specified in the grower/processor contract.
Marketing Allotments:
- At the beginning of each fiscal year, CCC estimates domestic human consumption of sugar and establishes marketing allotments.
- The Secretary aims to set an overall allotment quantity that prevents forfeitures under the Sugar Loan Program and assigns domestic producers at least 85% of the domestic human consumption market share.
- If a processor cannot market its allocation, CCC reassigns the deficit to other processors or to CCC for sale, then to raw cane sugar imports if necessary.
Penalties:
- Processors violating their marketing allocation for human consumption are liable for a civil penalty equal to three times the U.S. market value of the excess sugar involved in the violation.
How to Enroll:To apply for the Sugar Loan Program, producers must complete and submit a loan application to their local FSA office. The application process includes providing documentation of production, storage needs, and compliance with program requirements. Detailed enrollment instructions and deadlines are available through the local FSA office or the official USDA website.
Eligibility:Eligible applicants include processors of domestically grown sugarcane or sugar beets who comply with highly erodible and wetlands regulations and agree to the terms and conditions of the loan program.
Producers are encouraged to check with their local FSA office for specific requirements, application deadlines, and additional program details.
