Megawati agrees on subsidy plan for sugarcane farmers

Adianto P. Simamora, The Jakarta Post, Jakarta

President Megawati Soekarnoputri has agreed to a plan to subsidize local sugarcane farmers, according to the chairman of the Indonesian Farmers Association (HKTI), Siswono Yudhohusodo.

"The President has emphasized that we need to provide a subsidy to local sugarcane farmers, but it is only temporary," Siswono was quoted by Antara as saying after meeting with Megawati on Thursday.

There were no further details on the form or the size of the subsidy to be given to the farmers.

Minister of Trade and Industry Rini M. Soewandi and Minister of Agriculture Bungaran Saragih previously proposed a subsidy of Rp 500 for each kilogram of sugar product, as part of the effort to boost the productivity of sugarcane farmers.

Legislators have also been putting pressure on the cash- strapped government to provide a subsidy for the farmers.

Earlier this week, thousands of sugarcane farmers from Java and Sumatra staged a rally at the finance ministry to demand Minister of Finance Boediono approve the subsidy plan.

But Boediono has so far not yielded to the pressure, only saying that he has yet to discuss the plan with the related ministers.

According to HKTI, domestic sugar demand will continue to rise in the future, reaching some 10 million tons in 2035.

Today, the country's total sugar production reaches 1.7 million tons, with annual consumption at about 3.3 million tons.

Indonesia, the world's second largest sugar importing country, imported about 2.1 million tons of sugar in 1999, 1.2 million in 2000 and about 1.6 million last year.

Siswono said the government must come up with a plan to boost farmers' productivity in order to meet higher domestic demand in the future.

During the meeting with Megawati, Siswono also asked that the import tariff on sugar be increased to Rp 1,200 per kilogram from Rp 700 per kilogram.

He said that according to a World Trade Organization agreement, Indonesia was allowed to increase the import tariff on sugar to 110 percent.

"We must not give in to the pressure of the international community on our import tariff policy," Siswono said.

Local farmers and the Sugar Association have repeatedly called on the government to impose an import tariff of 110 percent to protect them against cheaper imported sugar.

Siswono said Thailand and India imposed an 80 percent and 90 percent import duty on the commodity, respectively.

Minister of Trade and Industry Rini issued on Monday a new decree regulating sugar imports. This new decree authorizes only state-owned plantation companies to import sugar.

The decree also stipulates that all sugar imports will be stopped if the price of the commodity falls below Rp 3,100 per kilogram at the level of the sugarcane farmers.