Signup for Sugar PIK Announced

August 18, 2000

USDA has announced a two-week signup period for the sugar payment-in-kind (PIK) program. Signup will begin Monday and continue through Friday, Sept. 1. Individual producers will work directly with processors to complete program forms. The processors in turn will provide the information directly to USDA.

The program offers sugar beet producers the choice of diverting from production a portion of their crop in exchange for sugar held by USDA. Farmers can bid for this sugar in USDA inventory by offering to divert acres from production. Farmers are limited to $20,000 in PIK payments. In early September, producers will be notified of bid acceptance. Producers with accepted bids will be required to visit their local USDA service center to report to the Farm Service Agency the specific acres that will be diverted.

By reducing this year’s harvest, the PIK Program is supposed to help reduce government inventory costs, reduce potential forfeitures of loan collateral under the sugar program during fiscal year 2001 and alleviate the current sugar overproduction situation.

USDA currently is holding 174,000 tons of refined sugar in inventory. Because market prices are at an 18-year low and around 4 cents per pound below the price level needed to encourage sugar loan repayments, a significant amount of the 640,000 tons of refined beet sugar pledged as collateral for outstanding nonrecourse loans is expected to be forfeited during the remainder of FY 2000.