RI aims to become self-sufficient in sugar production by 2007

Adianto P. Simamora, The Jakarta Post, Jakarta

The government plans to boost the productivity of sugar fields in the main sugar plantation area of Java as part of efforts to achieve self-sufficiency, Minister of Agriculture Bungaran Saragih said.

He said that under the plan, productivity was projected to nearly double to 8 million tons per hectare by 2007, from last year's 4.5 million tons per hectare.

This would boost the country's sugar output to 3 million tons in 2007, compared to this year's target of 2 million tons.

"Boosting productivity is necessary if the country is to become self-sufficient in sugar output. We need four years to meet the target," Bungaran told The Jakarta Post over the weekend.

The country's sugar output has been on the decline, as many farmers have shifted to other crops due to the low domestic price of the commodity. The country is now one of the world's largest importers, importing some 1.6 million tons last year mainly from Thailand to meet demands. Sugar is considered as a strategic commodity in the country.

Bungaran said that the government was preparing measures to boost the productivity of sugar farmers, thus allowing them to compete with more efficient farmers in other the countries who are flooding the local market with cheaper products.

He said that among the productivity-boosting measures were introducing high-quality seeds, improving the irrigation system and providing increased subsidized-credit facilities for the farmers.

He said that the government had allocated some Rp 1 trillion (US$112 million) for loans to farmers this year, much higher than last year's Rp 600 million.

The government would also spend some Rp 68 billion to purchase quality sugarcane seeds this year. The seeds will be distributed by state plantation firms to the farmers, he said.

Bungaran said that production cost of the sugarcane farmers would eventually fall to Rp 2,000 per kilogram, less than the international average level of around Rp 2,300 per kg.

Today, farmers' production cost is between Rp 3,000 to Rp 3,200 per kg.

The Ministry of Agriculture is also planning to open some 35,000 hectares of sugarcane fields outside Java over the next four years in a bid to boost output.

The country's sugarcane plantations currently cover some 350,000 hectares of land in Indonesia, mainly on Java.

Bungaran, however, said that the production-boosting plan must be accompanied by a policy to protect local farmers against cheaper imported sugar products and to curb illegal imports.

He feared that without such measures, farmers would not be interested to continue sugarcane farming.

"We still need to protect our farmers at least until 2007 by imposing high import tariffs or maintaining the current import regime of the commodity," he said

Minister of Industry and Trade Rini M. Soewandi introduced a policy last year limiting the number of importers to several state-owned plantation companies from previously 800 importers to help avoid oversupply, which would hurt local farmers.

But this policy has been criticized by some as it was seen as contributing to the recent surge in the price of sugar. Analysts suggested the government should instead impose a tariff system.