Rini mulls options to protect sugarcane farmers

Rini mulls options to protect sugarcane farmers

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini M. Soewandi said on Friday
that her office was currently evaluating alternative policies to
protect local sugarcane farmers against the impact of cheaper
imported sugar.

She said that the alternatives were either to impose an import
quota system or to adopt a "ceiling price and floor price"
mechanism.

"We'll make a decision soon," she told a media conference.

Rini did not provide details.

But the Ministry of Industry and Trade's Director General for
International Affairs Sudar SA said that a decision was expected
"within two weeks."

He said that the ministry was studying which alternative would
be more effective in protecting local farmers, and which did not
violate the World Trade Organization (WTO) ruling.

Local sugarcane farmers have intensified pressure on the
government to boost import duties to as high as 110 percent on
sugar to protect them from cheaper imported products, which have
forced sugar prices down at home.

Indonesia, Southeast Asia's largest sugar importer, currently
applies a 20 percent import tax on white sugar and 25 percent on
raw sugar.

Minister of Agriculture Bungaran Saragih has also called for a
higher import tariff.

Rini has so far rejected the higher tariff demand.

Her office initially responded by announcing a plan to adopt a
ceiling price and floor price mechanism. Under this policy, the
government would purchase farmers' sugar output if the price went
below the floor price, and resell it to the market when the price
moved above the ceiling price.

The policy is aimed at protecting both the interest of farmers
and consumers.

But the plan was criticized by Bungaran, who argued that such
a policy would be costly for the cash-strapped government.

Rini explained that raising the import tax would boost sugar
prices at home, and create a heavy burden on consumers.

She said that Indonesia need imported sugar products due to
the lack of domestic production.

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

Indonesia imported around 2.1 million tons of sugar in 1999
and 1.2 million tons in 2000.

Under the WTO ruling, the government is allowed to impose high
import tariffs on agriculture products.

Rini said that her office would only move to raise import tax
on sugar as well as on other agriculture commodities such as rice
and soybean if they were treated as "strategic commodities" that
must be protected by the government to ensure food security in
the country.

The Ministry of Agriculture has started a campaign to
implement a food security program, but it has yet to disclose
which particular agriculture commodities will be included in the
program.

"Until now, we don't have any clear food security program,"
Rini said.

The government has also been under pressure to limit rice and
soybean imports by raising tariffs. The current import tax on
rice is Rp 430 per kilogram, or about 30 percent of the value.