Sugar-to-ethanol program advances for White House review

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Under the program, called the Feedstock Flexibility Program for Bioenergy Producers, the federal government would buy excess sugar and sell it to biofuel manufacturers.

The White House's Office of Information and Regulatory Affairs received the rule from the U.S. Department of Agriculture (USDA) on Wednesday and now has up to 90 days to review it for publication.

As it does with other crops, the government operates a price-control program with sugar. The USDA gives loans to sugar producers that guarantee a minimum price for their product, and uses the crops as collateral. If prices drop dramatically, the government would be on the hook for the loss.

This year, sugar producers insist they need the program to stabilize prices because of prosperous crop yields and expected over-saturation of the market. They claim that domestic sugar production is threatened by increased imports from Mexico stemming from a loophole in the NAFTA trade deal. If sugar producers in both the Untied States and Mexico have a good year, they say, the excessive supply will lower prices and devastate producers, unless the Feedstock Flexibility Program acts as a safety net.

The sugar-to-biofuel program has been an option since the 2008 farm bill, but mediocre crop yields have prevented its need until now.

Sugar producers are happy the rule is moving forward.

"I'm virtually certain we'll be comfortable with the rule that comes out," said Jack Roney, a policy analyst at the American Sugar Association. "We're very confident that USDA will run this program in a competent and fair manner."

Food and candy manufacturers, who have often been at odds with the sugar industry, oppose the method.

"What the program does is it requires USDA, and in turn taxpayers, to buy excess sugar and sell it to ethanol producers for pennies a pound -- really, at a loss," said Jennifer Cummings, a spokesperson with the Coalition for Sugar Reform, an advocacy group made up of food manufacturers, business groups and limited government organizations. "We just think that it's wasteful and, at a time when our country is facing across-the-board budget cuts, for taxpayers to have to foot the bill for excess sugar… just doesn't make sense."

An analysis by the Congressional Budget Office expects the program to cost $228 million over 10 years, though none of those costs kick in until 2016.

Lobbyists on both sides of the sweetener divide are battling on Capitol Hill over the role of sugar in this year's farm bill.

"What we're hopeful happens is that Congress takes the opportunity this year to reform the sugar program," said Cummings.

--Megan R. Wilson contributed to this report

This story was updated on April 8 at 11:16 a.m. An earlier version incorrectly identified Jennifer Cummings, spokesperson with the Coalition for Sugar Reform.