Indonesia’s Sugar Crisis Presents a Sticky Situation for Importers

Indonesia’s sugar production is predicted to meet only 50 percent of domestic demand, including demand from food and beverage industries, so imports will be necessary to cover the balance.

Yet, the importation of sugar is a source of recurring problem. The root of the trouble is usually a conflict of interest between cane growers and consumers.

Refined sugar for use by the food and beverage industry also always poses a problem as it often leaks to the retail market.

The House of Representatives has planned to summon the trade minister to ask for the government’s plan to import over 224,000 tons of sugar.

In the meantime, the government has also threatened to give sanctions to refined sugar producers which leaked their products to the consumption markets.

“Producers will be fined directly if they leak their refined sugar to the retail markets. They will have their import quota reduced,” Gunaryo, the director general for domestic trade at the ministry, told the House’s trade commission.

He made the statement in response to complaints that refined sugar which is designed for industry had sometimes entered the retail markets.

“The circulation of refined sugar for industries in the retail market disturbs farmers’ sugar because it is sold at a lower price. We urge that the circulation of refined sugar should be put in order based on regulations,” Arum Sabil, chairman of the Indonesian Canesugar Farmers Association (APTRI), said last month.

He said this could have happened because production of refined sugar exceeded the need of food and beverage industries. The remaining then entered the consumption market.

To respond to the farmer’s complaint, the government will take sanctions against refined sugar producers who are proved to have leaked their sugar to domestic market.

The government also called on refined sugar producers to discipline themselves and supply refined sugar only to food and beverage industries in accordance with existing regulations so as not to disrupt the crystal or consumer sugar market.

“We have summoned eight refined sugar producers and asked them to call themselves to order so that no refined sugar will enter the consumer sugar market,” Gunaryo said.

He added that the ministry had met with all stakeholders in the production and distribution of refined sugar, and also set up a task force to monitor refined sugar distribution so that it would not enter the retail market.

“This forum will have a routine meeting to evaluate sugar distribution in the country,” Gunaryo said.

The Trade Ministry will also conduct a periodic monitoring to a number of provinces.

The government has also asked producers to take a hand in distributing the commodity. “We ask them to assign distributors where each of the distributors is required to sign an integrity pact to make sure that there would be no refined sugar leaked to the retail market,” Gunaryo said.

Suryo Alam, the secretary general of the Indonesian Refined Sugar Association (AGRI), said his group was ready to help monitor distribution of refined sugar.

This year, he said, the government allowed the importation of 2.4 million tons, which was reduced to about 2.2 million tons after processing. Industrial demand for refined sugar is estimated at 2.2 million to 2.3 million tons this year.

So, Suryo said, it is unlikely for refined sugar to enter the retail market because the government will only allow the importation of sugar based on the volume needed by industries.

Yet, the government’s plan to import sugar to meet shortage is always questioned. With the government planning to import some 224,200 tons of raw sugar, the House of Representatives is set to discuss the matter with Trade Minister Mari Elka Pangestu.

“I will encourage the House Commission IV to summon the trade minister to ask whether or not the planned sugar imports will harm the public’s interests,” House Speaker Marzuki Alie said this week.

He said he believed that the House agriculture commission had complete data on the planned sugar imports.

The commission would ask whether or not the sugar imports were necessary and whether or not they would harm the public’s interests because the plan would affect low-income stakeholders, particularly sugarcane growers, he said.

The government has allowed the Trade Ministry to issue permits for the import of 242,200 tons of raw sugar this year. The sweetener from abroad will be allocated to seven companies that have secured permits to import the commodity.

source: thejakartaglobe