Indonesia has abandoned its goal to be self-sufficient in the production of white sugar by 2014 after slashing its output forecasts for the next few years, a government official said, as the planned expansion of domestic sugarcane plantations flounders.

Similar to other commodity output estimates from the Indonesian government, analysts said the initial sugar forecasts had been overly optimistic and that the new figures underlined the country's need to rely more on imports. Indonesia's struggle to boost sugar production due to land license red-tape, competition for land and under-investment, is forcing Jakarta to spend heavily and become the world's biggest importer of raw sugar in place of China, which has ramped up domestic output.

"It was probably overestimated in the first place," Lynette Tan, an analyst at Phillip Futures in Singapore said of the new white sugar forecasts. "In Indonesia, the numbers are not usually very transparent." Southeast Asia's biggest economy will this year produce 2.66 million tonnes of white sugar, Agus Hasanuddin, director of seasonal crops at the agriculture ministry told Reuters, down 40 percent from the 4.4 million tonnes touted previously.

The country has also slashed its white sugar output forecast for next year by 43 percent to 2.8 million tonnes and by 46 percent to 3.1 million tonnes for 2014, Hasanuddin said. Overall sugar consumption in the country, with the world's largest Muslim population, will likely be 4.4-5.2 million tonnes this year, according to industry estimates. The archipelago was the world's second-largest sugar exporter in the 1930s. But ageing sugar mills, a vast network of smallholders and an influx of cheaper imported sugar put pressure on local production.

Raw sugar consumption in Indonesia's food and beverage industries will climb by 10 percent annually for the next five years, as the country's booming population boosts domestic demand. Java island supplies 60 percent of sugar output in Indonesia, where sugarcane farmers protested in December against plans to import sugar this year.

source: reuters

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