Govt readies fund to increase sugar output

The Jakarta Post, Jakarta

The government is to set aside Rp 1 trillion (US$112 million) in cash for local sugarcane farmers to help boost domestic sugar production, Minister of Agriculture Bungaran Saragih said.

Speaking to reporters in Yogyakarta on Thursday, Bungaran said that the government would also allocate another Rp 68 billion to purchase better quality sugarcane seeds.

"We will step up efforts to improve sugarcane quality and to boost local productivity in order to meet a target of 3 million tons in 2007," he said.

The country's sugar output has been on the decline, as many farmers shifted to other crops due to the low domestic price of the commodity.

Indonesia produces about 1.5 million tons of sugar annually, while domestic consumption stands at about three million tons a year.

The country imported some 1.6 million of sugar last year, mainly from Thailand, to meet demands.

The ministry earlier unveiled a plan to rehabilitate annually 70,000 hectares of sugarcane plantations, which would be replanted with top-grade sugarcane seeds.

Sugarcane plantations currently cover some 350,000 hectares of land in Indonesia, mainly on Java.

The productivity of the sugarcane plantation areas in Java is reported to be about four to five tons per hectare, compared to eight tons per hectare in Sumatra.

Bungaran said that to make the plan effective, sugar prices in the domestic market had to be increased so that farmers would have a sufficient incentive to plant sugarcane.

"We still need a protection policy, which can be met by imposing a higher import tariff and maintaining a trade ruling on sugar," he said.

The government currently imposes an import tariff of Rp 700 per kilogram on cane sugar, and also applies a trade ruling on sugar that only allows certain state-owned plantation companies to import sugar.