Government may import sugar<\/p>\n
By Hidayat Jati<\/p>\n
JAKARTA (JP): Retail prices of white sugar are expected to
\nstay at their current levels, even though Indonesia may have to
\nimport sugar this year because of a drop in output, an official
\nsays.<\/p>\n
\"Although the government has raised the producer price of
\nsugar from Rp 70,200 (US$31.90) to Rp 91,080 per quintal, we
\nexpect its retail prices to stay at their current levels of
\naround Rp 1,300 per kilogram,\" M. Badrun, chairman of the
\nNational Sugar Council, told The Jakarta Post at his office
\nyesterday.<\/p>\n
\"This is because we have scrapped the four percent excise on
\nthe commodity and reduced various costs, such as the management
\nfees for village cooperatives and the National Logistics Agency
\n(Bulog),\" said Badrun, who is also the Director General of
\nEstates of the Ministry of Agriculture.<\/p>\n
At the end of last month, a spokesman for the Ministry of
\nFinance announced that the government had decided to increase the
\nproducer price of sugar in order to increase the incentives for
\nsugarcane farmers.<\/p>\n
The spokesman said that the sugar producer price had not been
\nraised for two years.<\/p>\n
Bulog has a monopoly on the importation and distribution of
\nsugar, which causes domestic retail prices of the commodity to be
\nhigher than international price levels.<\/p>\n
Various observers, including the World Bank, have criticized
\nthis policy which, they believe, has made the Indonesian sugar
\nindustry inefficient.<\/p>\n
Government figures show that Indonesia currently has 69 sugar
\nmills, of which 61 are state-owned, with a combined processing
\ncapacity of 2.75 million tons of cane per day.<\/p>\n
The World Bank, in its latest annual report on Indonesia, said
\nthat only six of those sugar mills could be considered efficient.<\/p>\n
Argument<\/p>\n
Contrary the arguments of various analysts, Badrun insisted
\nyesterday that sugar retail prices would not increase, despite
\nthe forecasted fall in output this year.<\/p>\n
Untung Basuki, secretary of the Indonesia Sugar Association,
\ntold Reuters this week that this year's sugar output is projected
\nto fall to around 2.3 million tons from 2.46 million tons in 1994
\nand 2.48 million tons in 1993 because of a protracted drought.<\/p>\n
Bulog chairman Beddu Amang said last week that his agency
\nwould \"do its best\" to prevent the retail prices of sugar from
\nrising. He also said that Bulog would import about 250,000 tons
\nof sugar this year.<\/p>\n
The fiance ministry spokesman said Bulog might intervene in
\nthe market to keep retail prices stable.<\/p>\n
Badrun confirmed yesterday the possibility of importing.<\/p>\n
\"Retail prices will be stable because Bulog, being a
\nstabilizing agency, will not take any risks and is likely to
\nimport sugar this year,\" he said.<\/p>\n
Badrun told a parliamentary hearing recently that this year's
\ntotal supply of sugar was likely to reach 3.35 million tons,
\nincluding Bulog's stocks, which should be adequate to meet the
\ndomestic consumption of 2.95 million tons. On that occasion he
\nsaid that it would not be necessary to import this year.<\/p>\n
Yesterday he stressed that this year's importation would be
\nfor precautionary purposes only.<\/p>\n
According to official statistics, Indonesia imported 128,000
\ntons of sugar in 1993, down from 261,000 tons in 1992.<\/p>\n
Skeptical<\/p>\n
Meanwhile, a sugar analyst who watches Bulog closely, told the
\nPost yesterday that he was skeptical about the proposition that
\nretail prices would stay at their present levels because, he
\nsaid, Bulog had a limited capacity to intervene.<\/p>\n
\"How long can Bulog keep up market intervention before the
\nretail prices of sugar start climbing up? I know that such
\noperations are burdensome to Bulog,\" said the analyst, who
\nrequested anonymity.<\/p>\n
He said that the decisions to increase the producer price of
\nsugar and to scrap its excise still fell short of tackling the
\ncrux of the matter in the sugar industry, namely Bulog's grip on
\nthe commodity.<\/p>\n
Badrun dismissed the criticism yesterday, saying that the
\ngovernment was continually striving towards greater efficiency.<\/p>\n
\"We want to be efficient and to increase the role of market
\nforces in development,\" he said.<\/p>\n
Another agricultural economist, who is also a government
\nofficial, said the government's decision to raise sugar's farm-
\ngate price was a \"step in the right direction.\"<\/p>\n
\"But the end of the journey is still a long way off,\" said the
\neconomist, who asked not to be named. (hdj)<\/p>",
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