WASHINGTON, Jan 11: Seeking to boost the domestic sugar supply, the US Agriculture Department said on Friday it would sell remaining government sugar supplies and increase marketing allotments.

The USDA said it would immediately offer for sale about 185,000 short tons of federal sugar supplies. The total is made up of 23,988 short tons refined sugar and 160,901 short tons raw sugar.

“Market prices for both refined and raw sugar now are well above loan forfeiture levels, leading to today’s actions,” the USDA said. “Both actions are designed to increase the supply of sugar available to the domestic market.”

Under the new US farm law, the USDA must manage its sugar programme at no cost to taxpayers, thus avoiding forfeitures.

Jack Roney of the American Sugar Alliance said USDA’s actions would have “fairly minimal” market impact as it was largely expected.

He said the government stands to reap a large profit from the sale.

The USDA can currently sell its sugar for about 22 cents per pound. In 2000, when it purchased much of its sugar, prices fell as low as 17 cents, Roney said.

“It is important to remember back in 2000...there was much criticism this would be a terrible loss for the government,” Roney said. “On much of this sugar, USDA will see a significant profit.”

The USDA said it would also raise the amount of U.S. sugar allowed to be sold by 500,000 short tons to 8.2 million.

This matches USDA forecasts for U.S. sugar production for 2002/03. The USDA earlier on Friday projected the 02/03 U.S. sugar crop at 8.155 million short tons, up from 7.906 million last year.

The USDA said further adjustments in marketing allotments will be considered “as market conditions may warrant.”—Reuters