Farmers have yet to enjoy sugar price increase

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.