T

he government has raised the benchmark sugar price for this year, which will provide sugarcane growers with higher sales profit, while tightening rules to control the distribution of refined sugar.

Trade Minister Muhammad Lutfi said that the floor price, a reference for farmers to sell their sugar, had been set at Rp 8,500 (72 US cents) per kilogram, a modest increase from the Rp 8,250 announced in May.

'€œWe are doing this as a part of our efforts to improve the structure of our sugar industry. Without such a change, the current situation may harm the sustainability of the local sugar industry,'€ he said.

Sugarcane Farmers Association (APTRI) chairman Soemitro Samadikoen welcomed the government'€™s move to revise the floor price, saying that although the level still did not meet the Rp 9,500 desired, it would still help incentivize farmers.

'€œThis is a commitment that we should appreciate. We'€™re waiting for other policies in favor of domestic sugarcane farmers,'€ he said.

The government also prohibits sales of refined sugar through distributors and sub-distributors to avert leakage into the end-consumer market, as the sweetener is supposed to be distributed strictly to industrial users. Instead, refined sugar must be distributed directly from refiners to the food and beverage industry that consumes it.

The tighter distribution rule will apply for imported raw sugar to be processed by local refineries in the second half of this year.

As of July, importers had delivered 2.1 million tons into the country, feeding 11 refineries.

The government had planned to import 635,000 tons in the second semester of this year, but it has recently issued import permits for only 502,000 tons of the commodity. That was part of the overall 2.81 million tons of sugar imports planned this year, lower than 3.1 million tons realized last year.

The lower import plans are partly due to the economic slowdown, which has put the brakes on industrial activities and resulted in the leakage of 110,799 tons of refined sugar found in the end consumer market, thereby affecting sugar refiners that have had cancel purchase deals for up to 400,000 tons of raw sugar from Australia made some months before the issuance of import permits.

Soemitro of the APTRI further said that controlling the distribution of refined sugar would be a positive step toward stopping leakage in the end-consumer market and support the white sugar price at a favorable level for sugarcane farmers.

However, a system to ensure the tight supervision of its implementation should be made to ensure the goals are achieved.

Indonesia, the biggest sugar consumer in Southeast Asia, divides the sugar industry into two types: the white sugar industry, which processes sugarcane from domestic farmers, and the refined sugar industry, which processes imported raw sugar.

'€”JP/Linda Yulisman