Farmers have yet to enjoy sugar price increase

Adianto P. Simamora, The Jakarta Post, Jakarta

Following the skyrocketing price of sugar in the market, a number of economists have called on the government to revoke the current sugar trade regime and free the sugar market, while sugar farmers warn that they have not yet benefited from the currently high price.

University of Indonesia economist Chatib Basri wrote, in a front page article in Kompas newspaper on Monday, that the current trade regime benefited only a few importers and distributors but penalized consumers as a whole.

"This shows a corrupt trade regime, ending with a price increase that will only hit poor people," he said.

According to Chatib, the best, short-term way to handle the sugar problem would be through a tariff system.

Therefore, when prices went up, the government could lower tariffs, but when supplies were in abundance the government could increase tariffs.

The long-term solution would be to relocate inefficient sugar plants in Java to islands outside Java.

Researcher at the University of Indonesia Ine Minara Ruki agreed, saying on Monday that the trade regime would be temporarily effective in stabilizing sugar prices.

"But this is only a short-term solution; the root of the problem now is the inefficient local sugar industry," Ine said.

She said that the government had to make concrete programs to help the ailing sugar industry in a bid to boost output.

Sugar prices have increased from Rp 4,000 (45 U.S. cents) per kilogram earlier this month to around Rp 6,000 now.

Many blame the sudden increase on the failure of the appointed importers, namely state plantation firms and the State Logistics Agency (Bulog), as well as distributors that sought large profits from the business.

This incident has encouraged many to ask the government to revoke the policy.

Meanwhile, the Association of Sugarcane Farmers (APTRI) said that it supported the current trade rules on sugar, which limit the importation of sugar by state-owned plantation companies and Bulog.

APTRI chairman Abdul Wachid said that farmers had not yet enjoyed the currently high market price of sugar, as they had not yet harvested their sugar cane.

The harvest would normally start in May, as the country's sugarcane processing plants start grinding from May through July.

Wachid warned that if the government revoked the current trade rules on sugar, thousands of sugarcane farmers would stage a massive rally.

"We shall continue struggling so the policy remains intact until the sugarcane grinding process commences next month," he said.

It was also sugarcane farmers that forced Minister of Industry and Trade Rini Soewandi to introduce sugar trade regulations via a ministerial decree last year.

The decree stipulated only companies that bought some 75 percent of their raw material from sugarcane farmers were allowed to import sugar.

It also said that the imports could only be carried out if the price had increase to Rp 3,100 per kilogram at the sugarcane farmers' level.

Speaking at a media conference on Monday, chief editor of the journal Sugar Observer Agus Pakpahan said the decree was fine, but its implementation was wrong, resulting in a sharp rise in sugar prices.

"The spirit of the decree is lofty (to help protect farmers)... but the implementation is still very poor."

Therefore, Agus, former director general for plantations at the Ministry of Agriculture, urged the government to maintain the policy, saying it was effective in protecting the interests of sugarcane farmers.