The Farm Service Agency of the U.S. Department of Agriculture (USDA) recently announced that purchase invitations have been extended to solicit bids to the Commodity Credit Corporation (CCC) through the Feedstock Flexibility Program (FFP).

Congress created FFP in the 2008 Farm Bill which requires the purchase of sugar as a feedstock for producing fuel-grade ethanol and other biofuels to avoid forfeiture of sugar pledged as collateral by processors when securing nonrecourse commodity loans from CCC.

USDA is announcing the use of the FFP following the success of two sugar “exchanges” earlier this summer. On July 9, USDA awarded contracts to purchase 91,238 metric tons of sugar in exchange for 299,153 metric tons of re-export credits and Colombian Trade Promotion Agreement Certificates of Quota Eligibility. On July 31, USDA announced the results of a second exchange and purchased 15,504 metric tons of sugar and removed 46,559 metric tons of import access from the market.

Federal law allows sugar processors to obtain loans from the CCC with maturities of up to nine months at the beginning of the crop year. Upon loan maturity, the sugar processor may repay the loan in full or forfeit the sugar used as collateral to the government to satisfy the loan. The last time sugar forfeitures occurred was in 2004, but atypical market conditions have caused USDA to take a number of actions this crop year to avoid forfeitures and ensure the sugar program operates at the least cost to the federal government.

The Farm Service Agency’s invitation for U.S. sugar processors to sell sugar to CCC, and the invitation for bioenergy producers to buy sugar under FFP for bioenergy production, can be found on the FSA Commodity Operations website here.