Farmers take swipe at sugar producers

Farmers take swipe at sugar producers

Eva C. Komandjaja, The Jakarta Post, Jakarta

Growers have blamed the high cost of locally-produced sugar on
the old and inefficient manufacturing facilities of producers,
and accused them of deliberately organizing damaging and
misleading campaigns designed to put the blame on growers in
order to obtain profitable import licenses.

Indonesian Association of Sugarcane Growers (APTRI) chairman
Arum Sabil told The Jakarta Post on Friday that the sugar
producers, which are mostly state-owned plantations, had
deliberately manipulated the results of the tests on sugarcane
produced by growers to blame the growers, rather than themselves,
for being primarily responsible for the high cost of local sugar.

"Tests by our producers always show that the sugarcane
produced by the growers has a low sucrose content of 6 percent.
However, laboratory tests outside the country show a higher
sucrose content of between 9 and 10 percent," he said.

State plantation firms PT Perkebunan Nusantara IX, X and XI
and PT Rajawali Nusantara Indonesia (RNI), the country's main
sugar manufacturers, said in a recent hearing with the House of
Representatives that the decline in the country's sugar
production was due to the low productivity of the growers. These
firms are among the few allowed by the government to import
sugar.

From being the world's second largest sugar producer in the
Dutch colonial era, Indonesia has move backwards to become the
world's second largest sugar importer after Russia. Last year,
Indonesia produced 1.8 million tons of sugar, while demand
reached 3.2 million tons.

Arum said that by blaming farmers for being unable to produce
enough sugar to meet local demand, local producers were seeking
to justify their claims that Indonesia needed to import sugar.

As a matter of fact, Arum said, the producers preferred
importing sugar to refining it as the first option was cheaper,
thus generating higher profits for them. They needed to pay
between Rp 2,000 (24 U.S. cents) and Rp 2,800 for a kilogram of
imported sugar, while they had to spend at least Rp 3,410 to
produce a kilogram of sugar.

The main reason for the high cost of local sugar was the
machinery owned by local producers, which Arum said was mostly
old and inefficient.

"Rather than replanting sugarcane plantations, the government
needs to revitalize the sugar factories by replacing old and
manually-operated equipment and letting inefficient human
resources go," said Arum.

He was referring to the government's plan to replant sugarcane
plantations in Java, which was announced by Minister of
Agriculture Bungaran Saragih in September this year.

The government has allocated Rp 68 billion for the program,
which is designed to ensure sugar self-sufficiency for Indonesia
by 2007.

However, Arum said that the plan was doomed to fail given the
numerous irregularities that had been detected in the
disbursement of the funds.

He claimed that some of the money was being dished out to
people who were not sugarcane growers.

"We have found many cases in Central Java, West Java and East
Java where the funds were disbursed to people who are not
growers, but are connected to state-owned plantations or
plantation agencies," he said.

Rather than receiving money to replant their fields, the
country's growers needed protection from the government against
cheap imported sugar, especially from Thailand, according to
Arum.

"Local growers can still buy sugarcane seeds on their own.
What they need is protection against the influx of imported sugar
because other countries do the same thing," he said.

For example, he said, Thailand protected its sugarcane growers
by applying high tariffs on imported sugar to stabilize local
sugar prices, providing them with soft loans and strictly
enforcing the law on sugar smuggling.

"The biggest problem comes from smuggled sugar. It badly hurts
our sugarcane growers as it is sold as cheaply as Rp 1,200 per
kilogram because no import duties and taxes are applied to the
commodity," he said.

He said most of the illegal sugar came from Malaysia, India
and Thailand, where sugar production costs could be half of the
production cost in Indonesia due to hefty subsidies provided by
those countries' governments for agriculture producers.