US government to distribute sugar for ethanol production under terms of the ‘07 farm bill

The International Herald Tribune writes that the farm bill passed by the US House of Representatives last month creates a program for the US Government to purchase sugar and resell it to ethanol producers. The measure is in response to the elimination of import quotas on sugar next year under the terms of the North American Free Trade Agreement (NAFTA). US sugar makers have been concerned about a potential flood of cheap Mexican sugar into US markets. The program is estimated to cost $1.3 billion over 10 years. Sugar quotas and price guarantees have provide the US sugar industry with protection for many years, but have increasingly come under fire from sugar-based ethanol advocates who see the price supports as hurting the profitability of ethanol made from sugar. Sugar has a much higher energy yield than corn, which is the primary ethanol feedstock in the United States.

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