Sugar PIK Announced

September 4, 2001

USDA will implement a payment-in-kind program for the current sugar crop in an effort to reduce the current inventory of surplus sugar. USDA has accumulated 741,148 tons of sugar under the current sugar price support program. Because of the nature of the product, there are fewer opportunities for use of this surplus than for other commodities. USDA is incurring monthly storage costs of $1.35 million on 446,594 tons of refined sugar and 294,554 tons of raw cane sugar.

The PIK program will offer eligible sugar cane and sugar beet growers the choice of diverting from production a portion of their 2001 crop in exchange for sugar held by USDA. Farmers can bid for this sugar in CCC inventory by offering to divert acres from harvest. The total diversion program will be limited to a maximum payment-in-kind of 200,000 tons of surplus sugar, and individual farmers will be limited to a maximum $20,000 value in sugar. By reducing this year's harvest, the PIK program should help reduce government inventory costs and alleviate the current sugar oversupply situation.

Sign-up for the program will begin Sept.10 and end Sept. 21. Individual producers should contact their local USDA Service Center or FSA County Office between these dates to obtain additional information, report the specific acres that will be diverted, and to complete program forms. The amount of sugar in dollars per acre that the producer could generate will be computed for each producer, and each producer will specify in dollars the amount of sugar the producer will take to divert the acres. Bids will be ranked on the percentage that the second amount is of the first. The bids will be ranked so as to ensure that the 200,000 ton goal is not exceeded.

USDA plans to announce by Sept. 28 which bids it will accept (by ranking percentage) subject to such additional eligibility criteria as also may apply to the program. Program agreements with full details will be available from Farm Service Agency county offices after Sept.10 for those areas where the program will be made available.

Additional information on the program and the bid process will be available on the FSA web, http://www.fsa.gov prior to Sept. 10. Successful bidders will be notified by Sept. 28 of their acceptance.