Sugar and wheat flour prices begin to stabilize

JAKARTA (JP): Prices of sugar and wheat flour have begun to stabilize due to a sharp fall in demand since last month, a distributor has said.

Ishadi, the chairman of the Federation of the Associations of Sugar and Wheat Flour Distributors (Gapegti), said yesterday that wholesale trading had been very sluggish over the past few weeks despite the fall in prices.

He said sugar demand had declined over 25 percent since early February, while wheat flour demand had dropped 50 percent.

He attributed the falling demand to declining consumption.

"Consumers may have cut their consumption of sugar and wheat flour in a bid to cut spending," said Ishadi.

In January, sugar prices climbed to Rp 2,000 per kilogram (kg), while wheat flour reached Rp 1,500 per kg.

He said Gapegti had been selling sugar at Rp 1,400 per kg at its warehouses, Rp 1,450 per kg in the market and Rp 1,600 per kg to retailers since February.

Over the same period, Gapegti sold wheat flour at Rp 21,500 per 25-kg bag at its warehouses, while at Rp 21,525 in the market. The current wheat flour retail price is Rp 1,000 per kg.

Ishadi claimed the association's market intervention had also contributed to the fall in the commodities' prices.

Gapegti, the trading arm of the State Logistics Agency (Bulog), carried out a massive market intervention in January to ease rising prices of the two commodities.

Bulog previously monopolized the import and distribution of important commodities such as rice, sugar, wheat and soybeans but was obliged to relinquish the privileges from Feb. 2, except for rice, as part of the International Monetary Fund's reform program for the country.

Bulog's chief, Beddu Amang, said last week that his agency would continue to import wheat and wheat flour until private companies were able to procure and sell the commodities on the domestic market.

Beddu said the import activities were essential to ensure price stability, citing that the sharp fall in the rupiah's value against the U.S dollar had tripled the price of imported commodities such as sugar and wheat flour.

He promised that his agency would not increase its sugar and wheat flour prices until May.

The head of Bulog's public relations department, Masykur Sulaiman, said separately that the agency had purchased 2 million tons of imported unhusked rice since January, 900,000 tons of which had already been unloaded at seaports across the country.

He said the agency would import 768,384 tons of unhusked rice in March alone.

Beddu said last month that the agency would import 1.1 million tons of sugar, 4.25 million tons of wheat and 3.3 million tons of rice this fiscal year to meet domestic demand.

He said Bulog's rice stocks would not dip below 1.7 million tons before April. (gis)