US sugar ethanol prospects: will the Farm bill sugar purchase mandate fuel US sugar ethanol expansion?
A provision in the 2007 Farm Bill requires the Department of Agriculture to buy surplus domestic sugar resulting from the influx of Mexican sugar next year when the sugar tariff is lifted next year. The government would sell the sugar, at a discount, to ethanol producers. The expected market price for sugar has not been determined, but will compete with a per gallon raw feedstock cost of approximately $1.17 per gallon for corn ethanol.
The energy return from energy invested from sugar ethanol is more than six times greater than the return from corn, the primary ethanol feedstock in the US.
The as-yet unsigned Farm Bill passed in the House this summer 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.
