“Only about 16 thousand tons remain unpurchased. Last Friday, the President ordered immediate procurement,” Amran told reporters on Monday following a Coordination Meeting on the Downstreaming of Priority Plantation Commodities, held with Home Affairs Minister Tito Karnavian and regional leaders from across the country in Jakarta.
Amran explained that the absorption model involves rotating the IDR 1.5 trillion fund to buy sugar from farmers, sell it to the market, and then use the revenue to purchase more sugar.
“This mechanism ensures optimal sugar absorption, maintains stable prices, and guarantees market access and better profits for farmers - all in support of national food stability,” he said.
“We’re essentially rotating the funds. We buy sugar with the IDR 1.5 trillion, sell it in the market, and then reinvest the revenue into more purchases.”
Earlier, Deputy Minister of Agriculture Sudaryono reported that the government had already absorbed 40,000 tons of sugar from farmers following the capital injection by Danantara Indonesia.
“We’ve received IDR 1.5 trillion in funding, and we’ve used it to procure sugar from farmers - about 40,000 tons so far. It’s a phased process,” Sudaryono said after a limited coordination meeting at the Coordinating Ministry for Food Affairs in Jakarta on Thursday, September 11.
The government is committed to purchasing only the sugar that cannot be absorbed by the market. The approach mirrors the role of state logistics agency Bulog in buying up surplus rice from farmers.
The absorption initiative aims to safeguard farmers’ welfare while maintaining sugar price stability in the domestic market.
Sudaryono emphasized that the IDR 1.5 trillion fund does not have to be fully spent. However, if market absorption remains low and the allocated budget runs out, additional funding may be proposed.
“For now, there’s still remaining funds. We haven’t exhausted the budget yet,” he added.
The IDR 1.5 trillion was disbursed by PT Danantara Asset Management (Persero) in the form of a shareholder loan. The sugar purchases are being carried out by state-owned food holding company PT Rajawali Nusantara Indonesia (ID FOOD).
ID FOOD is tasked with offtaking sugarcane farmers’ production from PT Sinergi Gula Nusantara (SGN) sugar mills, as well as its own processing facilities.
This targeted absorption program is focused exclusively on sugarcane farmers’ produce, serving as a stimulus to help the government stabilize sugar prices from upstream to downstream.
The initiative is also intended to curb the leakage of refined sugar into the consumer market, which could otherwise increase logistical and financing burdens.
Related news: ID FOOD steps in to rescue sugar market with major capital injection
Translator: Harianto, Azis Kurmala
Editor: Primayanti
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