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Farmgate price hike deemed too little to boost sugar output, achieve self-sufficiency
The National Food Agency has increased the farmgate price for sugar, but farmers say the hike is too small and experts believe it will not move the country closer to its goal of self-sufficiency in sugar output.
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State-Owned Enterprises (SOEs) Minister Erick Thohir (left) visits state-owned sugar company Industri Gula Glenmore (IGG) owned by state-owned plantation company PTPN XII in Banyuwangi, East Java, in September 2021, accompanied by PTPN III president director Muhammad Abdul Ghani. (State-owned enterprises (SOEs) Ministry/Public relation teams)
T
he National Food Agency (NFA) has increased the farmgate price for sugar by Rp 1,000 (6 US cents) per kilogram to halt a downtrend in prices and lift nationwide production, but there are doubts as to whether the hike is enough to make much of a difference, and industry insiders say red tape is keeping Indonesia from reaching its goal of self-sufficiency in sugar production.
The NFA increased the farmgate prices for white sugar to Rp 12,500 from the previous Rp 11,500 per kg on Monday to stabilize dropping plantation prices for white sugar in Southeast Asia’s largest economy, which is one of the world’s largest importers of raw sugar.
Soemitro Samadikoen, chairman of the Indonesia Sugarcane Farmers Association (APTRI), said the drop in prices was because a sugar factory was locking in orders from farmers in bulk at very low prices long before harvest.” He went on to say that the practice, called ijon, hurt farmers.
“Traders buy at low prices from farmers and producers, then sell at higher prices in markets,” he told The Jakarta Post on Monday.
He expressed appreciation for the NFA’s decision to increase farmgate prices, but added that it was “not enough” to improve farmers’ welfare, let alone significantly boost national sugar output.
“We can see that, at a time when global sugar prices have shot up, sugar prices at the farmgate level improve at a snail’s pace, while we continue importing sugar. There has to be something wrong here, in terms of regulations,” Soemitro said when asked about whether the increase in sugar prices at the farmgate level would move Indonesia closer toward achieving its self-sufficiency dream.
Aris Toharisman, secretary-general of the Indonesia Sugar Association (AGI), said farmgate sugar prices had dropped because leftover stock from last year, which retailed at a lower price, was dragging down sugar prices overall.
