Could sugar dumping push ethanol production up?

Pulling out an interesting little option from the 2008 Farm bill, the USDA is considering re-directing US produced sugar to ethanol production to drive up sugar prices.  From what I understand, the US sugar industry is completely supported by farm policy and wouldn’t exist with subsidies (some disgusting facts here, here and here).  Seems like a big circle of farm aid here… subsidy produced sugar used to produce ethanol in subsidy supported ethanol plants??  big pile of sugarOn the other hand, it sounds like the USDA is on the hook if the sugar producers go under due to low prices because the USDA gave them farm loans.  Dumping this sugar at a low cost at the doors of the ethanol plants will help many of them which have been shut down in the face of high corn prices and at the same time the USDA wouldn’t lose as much money as if they did nothing.  I wonder if the ethanol plants have to re-tool their systems, or if they can just dump the sugar directly into the fermentation tanks?  Apparently it would complicate things:

“The “logistical complications would decrease the value of the sugar to us,” said Neal Kemmet, president and general manager of Ace Ethanol LLC, an ethanol plant in Stanley, Wis.”

Since these articles were published in March, I haven’t seen any recent news on it, but sugar prices have dropped even further to around 16 cents / lb.

more here as well:

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