Bulog to import up to 1 million tons of sugar

JAKARTA (JP): The State Logistics Agency (Bulog) plans to import between 900,000 metric tons and 1 million tons of sugar this year to meet domestic demand.

Bulog chairman Beddu Amang said Tuesday that 50 percent of the imported sugar would be white sugar, while the other half would be raw.

The imported raw sugar is to be processed by sugar mills in the country.

"We can reduce our costs by importing raw sugar since it is less expensive than white sugar. This will also cut the subsidy needed to import sugar. Besides, its value will be increased after our sugar mills process it," Beddu said.

Beddu said Bulog planned to import low-quality white sugar in order to keep expenses down.

"Importing low-quality white sugar could save us between US$30 and $50 per ton," he said.

Australia sold about 20,000 tons of raw sugar to Indonesia last week and is eyeing a bidding process scheduled for next week, Queensland Sugar Corp. (QSC) chief executive David Rutledge said yesterday.

Indonesia held its first transparent commodities tender last week, which Rutledge described to Reuters as "very professionally conducted".

Indonesian officials said July 30 that they had bought 30,000 tons of raw sugar and 202,000 tons of white sugar in the tender.

"Clearly it's something that we'll have a look at," Rutledge said of next week's bigger Indonesian tender for 500,000 tons of raw sugar, but he declined to say if QSC would bid.

Indonesia's tender last week was "very competitive", with sugar on offer from a number of parties, he said. He declined to disclose prices for the Australian sugar.

Beddu said Bulog's sugar stocks had become depleted after the agency reduced its purchases of the commodity from local sugar mills following the government's decision to liberalize the domestic sugar trade two months ago.

Under the scheme, private and state sugar mills are allowed to sell 25 percent of their production output directly to the market, while the remaining 75 percent must be sold to Bulog.

Previously, they were obliged to sell 100 percent of their output to Bulog.

The move has caused a sharp drop in Bulog's stocks, prompting a sharp retail price increase to Rp 3,500 from Rp 2,500 previously, Beddu said.

The government recently directed Bulog to stabilize sugar prices in response to the increases. (gis)