Sat, 27 Dec 2003

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.