Questionable Payments and Loan Defaults in Sugar Programs

CED-79-24: Published: Mar 16, 1979. Publicly Released: Mar 16, 1979.

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The Department of Agriculture (USDA) has two programs intended to help sugar producers with price-support payments and price-support loans. The sugar price-support program on 1977 crop year sugar has resulted in questionable payments of millions of dollars. The plan program for 1977 crop year sugar is beset with problems of storage, underpayments to growers, and failure to vertify or enforce minimum wage requirements.

Substantial defaults on government loans are occurring as a result of low-cost sugar imports, but no final plans have been made to dispose of the sugar forfeited to the government as loan collateral. The options for disposing of forfeited sugar are limited, but USDA is exploring the most promising option of donations to domestic food assistance programs. The method used to calculate the average market price for sugar produced in Hawaii distorted the national average market price and led to higher support payments. In addition, three sugar processors failed to comply with regulations in reporting income information needed to compute support payments which resulted in all processors being underpaid.

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