RI sugar imports may reach six-year high, U.S. says
RI sugar imports may reach six-year high, U.S. says
Jason Gale, Bloomberg/Singapore
Indonesia's sugar imports may surge 24 percent to a six-year high in the coming 12 months as local suppliers struggle to meet growing demand for the sweetener, a U.S. government agricultural attache said.
Indonesia, the world's third-largest sugar importer, will probably buy the equivalent of 1.8 million metric tons of the commodity in the year ending April 30, 2006, the U.S. Foreign Agricultural Service in Jakarta said. That's up from 1.45 million tons a year earlier and the highest since 1999-2000.
Attempts to cut Indonesia's import bill in the wake of rising sugar prices are failing because farmers and processors haven't invested enough money in improving productivity, Chris Rittgers and Niniek S. Alam said in the report. Increased demand from Indonesia may help buoy sugar prices, which have gained 23 percent in New York the past year.
"The Indonesian sugar industry faces numerous obstacles," Rittgers and Alam said. "Smallholder farmers, who lack the resources to invest for increased productivity, dominate sugar- cane production. Furthermore, the milling sector, largely government of Indonesia-owned, is inefficient and requires significant investment to attain any sort of business viability."
Indonesia will produce the equivalent of 1.8 million tons of raw sugar in the year ending April 2006, 12 percent less than a year earlier, the report said. Consumption is forecast to grow 7 percent to 3.8 million tons.
The shortfall will be met by a further 200,000 tons of sugar from the country's inventories, reducing stockpiles to 920,000 tons by April next year, the report said.
Indonesia's sugar imports are mostly supplied by Thailand and Australia. Only Russia and the European Union imported more sugar in 2003, according to the International Sugar Organization.
Raw sugar for delivery in July rose yesterday for the second straight day, gaining 0.13 U.S cent, or 1.6 percent, to 8.43 U.S.cents a pound on the New York Board of Trade. Prices reached 9.37 cents a pound on Feb. 22, the highest closing price for a most- active sugar futures contract in four years.