"The government-sanctioned sugar price will be improved to a higher level, so that the bailout fund for farmers sugar will run well," the trade minister said here on Friday.
The minister explained that the government will take the step in an effort to maintain sugar price stability and the survival of farmers sugar business. This is because in the early stages of milling season, the sucrose content of sugarcane was still below 8.07 percent.
"With regard to the two aspects, sugar price in the market will not be raised but will be maintained at the range of Rp11,200 per kilogram. The increase in the HPP from Rp8,250 to Rp8,500 per kilogram will not disturb sugar price in the market," the minister asserted.
Sometime earlier, the government had raised the reference price sugar to Rp8,250 per kilogram as Indonesia had entered the milling season.
Based on a letter from the Ministry of Agriculture on April 8, 2014, the sucrose content of sugar this year has been set at 8.07 percent.
With sucrose content of that level, the basic production cost (BPP) was set at Rp7,892 per kilogram.
In the meantime, the Indonesian Sugarcane Farmers Association (APTRI) said the Rp8,250 per kilogram HPP had not yet met the expectation of sugar farmers.
According to a calculation by an independent team from three national universities, the proper basic production cost was Rp8,791 per kilogram, so that the reference price should be set at Rp9,500 per kilogram.
Indonesias annual sugar consumption is estimated at five million tons, while the country produces only 2.50-2.57 million tons of white sugar per year.
Therefore, almost 50 percent of domestic demand, including that from the food and beverage industry, is met by imported sugar.
However, the governments policy on importing sugar has always been met with criticism from farmers and the public.
The Trade Ministry has issued a license for the importation of 502 thousand tons of raw sugar in the second semester of 2014. Thus, the remaining quota for the importation of sugar this year has stood at about 133 thousand tons of the allocated 2.8 million tons.
"For the second semester, the trade ministry has allowed the importation of 502 thousand tons up to the end of the year, so that refined sugar industries will be able to meet their contracts with food and beverage industries. We will also issue the remaining one," Minister Lutfi noted.
He noted that the 502 thousand tons of refined sugar whose import was allowed should not be sold through distributors but must be directly sold to users, such as food and beverage industries.
"For the import in the second semester, they are not allowed to sell it through distributors but directly to users," the minister added.(*)