T

he government will push local sugar producers to boost production to meet the estimated shortfall of 500,000 tons of sugar needed by April 2010.

State Minister for State Enterprises Mustafa Abubakar said late Friday that the government would prioritize local sugar to help meet national demand for 1.2 million tons of sugar until the beginning of the new crushing season in April next year.

The crushing season usually runs from April until October

"We prioritize sugar production from local companies such as state plantation firms PT Perkebunan Nusantara (PTPN) and PT Rajawali Nusantara Indonesia (RNI), as well as from domestic private companies," Mustafa said adding that importing the product would be the last option.

However, he said his ministry planned to have a meeting with the Trade Minister and Industry Minister to talk about imports, "*The ministries* plan to meet next Thursday. We hope we can solve the sugar shortage problem soon."

Of the total needed, the government had secured 620,000 tons of sugar up to the present, according to Mustafa, adding that the government now was re-calculating the production capacity of local producers before purchasing sugar from overseas.

Every year the country imports about 1.6 million tons of sugar to help meet national demand.

The country's annual national production of sugar is about 4 million tons, with state plantation firms PTPN and RNI producing about 3 million tons of sugar every year, according to the State Enterprises Ministry.

According to the Indonesia Refined Sugar Association (AGRI), national sugar demand this year is 4.85 million tons, 2.7 million tons of which is for household consumption and 2.15 million tons is for industrial consumption.

The government has said that in an effort to stop the sugar shortage from recurring, it is facilitating that state plantation firm PTPN will build three new sugar factories worth a total of Rp 4.5 trillion (US$477 million) next year. Those factories, intended to begin operations in 2011, are expected to produce an additional 30,000 tons of sugar annually.

The government is also rehabilitating several old sugar mills to improve its production.

Currently Indonesia has about 61 mills, of which 68 percent were built during the Dutch colonial era.

It has been reported that 80 percent of sugar mills are in poor condition and often fail to produce good sugar.

State bank PT Bank Rakyat Indonesia (BRI) confirmed Friday that it had disbursed Rp 2.2 trillion in loans to the sugar industry.

"Out of the Rp 2.2 trillion, Rp 1 trillion was used on the rehabilitation program," BRI business director Asmawi Syam said.

He said that state banks had committed to give Rp 9.7 trillion in loans to the domestic sugar industry.

The government estimated that by 2014 Indonesia would need to produce 4.8 million tons of sugar to fulfill its domestic needs and to be self-sufficient in sugar.