USDA Foregoes Feedstock Flexibility Program for Crop Year 2025
Washington D.C. – The U.S. Department of Agriculture (USDA), through its Commodity Credit Corporation (CCC), announced today, December 31, 2025, that it does not anticipate purchasing or selling sugar under the Feedstock Flexibility Program (FFP) for the upcoming crop year 2025. This crop year spans from October 1, 2025, to September 30, 2026. The decision reflects the USDA's assessment that current U.S. ending sugar stocks are unlikely to result in loan forfeitures by sugar processors.
Understanding the Feedstock Flexibility Program
The Feedstock Flexibility Program, initially authorized in the 2008 Farm Bill and reauthorized in subsequent legislation, including the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2025, serves as a crucial mechanism within the U.S. sugar program.
Its primary objective is to prevent sugar loan forfeitures to the CCC. Under federal law, sugar processors can obtain loans from the USDA with maturities of up to nine months. If market prices fall below a certain level, processors have the option to forfeit the sugar collateral to the USDA instead of repaying the loan.
Should the USDA face the likelihood of such forfeitures, the FFP mandates the purchase of surplus sugar and its subsequent sale to bioenergy producers, typically for ethanol production. This process effectively removes excess sugar from the food market, thereby helping to stabilize and support domestic sugar prices and avoid budgetary costs to the federal government.
Current Market Outlook for Sugar
The USDA's determination for crop year 2025 is based on projections from its December 9, 2025, World Agricultural Supply and Demand Estimates (WASDE) report. This report indicated that U.S. ending sugar stocks for the period are not expected to reach levels that would trigger loan forfeitures.
Recent forecasts for the 2025/26 sugar supply and use in the U.S. show a projected supply of 14.119 million short tons, raw value (STRV). Ending stocks are anticipated to be around 1.867 million STRV, resulting in a stocks-to-use ratio of 15.2 percent. Domestic sugar production for 2025/26 is estimated at 9.285 million STRV.
Globally, sugar production for 2025/26 is forecast to increase by 8.3 million tons year-over-year, reaching 189.3 million tons, driven by higher output in countries like Brazil and India. This global increase is also expected to contribute to a rise in global ending stocks.
Continued Monitoring and Future Announcements
Despite the current decision, the USDA affirmed its commitment to continuously monitor various factors influencing the domestic sugar market. These include:
- Domestic sugar stocks
- Consumption trends
- Import levels
- Other relevant market variables
The next quarterly estimate regarding the Feedstock Flexibility Program is scheduled to be released on or before April 1, 2026.
5 Comments
Africa
While the USDA cites stable stocks, the underlying structure of the sugar program continues to be debated for its impact on both domestic and international markets.
Habibi
Avoiding loan forfeitures is financially responsible, but critics might argue this policy still prioritizes producers over broader consumer interests.
Muchacha
Consumers still pay inflated sugar prices because of these policies.
Comandante
This program is unnecessary interference anyway.
Mariposa
A healthy sign for our domestic sugar industry.