Sugar dispute starts souring

Eva C. Komandjaja, The Jakarta Post, Jakarta

The dispute between sugar cane farmers and sugar factories is heating up with both sides blaming each other for being inefficient and unproductive, causing a fall in the country's sugar output.

The Indonesian Association of Sugarcane Growers (APTRI) chairman, Arum Sabil, told The Jakarta Post that the government needed to revitalize the nation's sugar factories by replacing old and manually operated equipment to boost sugar output.

"We urge the government to replace manual with semiautomatic machinery to increase productivity," said Arum.

Arum, who represents sugar cane growers in the country, also has asked the government to buy new machinery using the import tax on sugar.

"PT Perdagangan Indonesia (PPI), a licensed sugar importer, has contributed Rp 50 billion (US$5.8 million) to the government from import tax after operating for only three months.

"Therefore, we expect more money from other importers, such as state-owned plantations (PTPNs), who have been importing sugar for years. We are quite sure that the government can afford new machinery with that money," said Arum.

"Out of 31 sugar factories in Java, we have identified 16 that need to be upgraded immediately as the equipment is very old. We will make them a pilot project for East Java," said Arum.

However, he could not estimate how much it would cost to replace manually operated machines with semiautomatic ones, but he admitted that he had discussed the matter with Director General of Foreign Trade Sudar S.A at a meeting in Jakarta last week.

Meanwhile, chairman of the Indonesian Sugar Association (AGI), which represent sugar factories, Faruk Bakrie rejected Arum's argument. He asserted that it was the farmers who were inefficient.

"Money from sugar import taxes should be allocated for the purchase of new high-quality seeds instead of buying machinery for sugar factories. There is nothing wrong with our sugar factories, and they are working perfectly fine. Many of them already have new machinery," said Faruk.

Faruk mentioned as an example that there were seven sugar factories in Lampung and two in Medan that already have new equipment.

"It is true that all sugar factories are still manually operated, but that is because the government wants to give job opportunities to local people," he said.

He also said that it would take approximately US$150 million to install new sugar processing machinery, and it would be a waste of money if the cane still had a low sucrose content.

"No matter how advanced the machines we have are, if the sucrose content is low, our country's sugar output would not increase," said Faruk.

From being the world's largest sugar exporter during the Dutch colonial era, Indonesia is now the world's second largest importer after Russia. In 2002, Indonesia produced 1.8 million tons of sugar, while demand reached 3.2 million tons.

Arum has repeatedly maintained that sugar cane produced by farmers contains a high sucrose content, which is confirmed by foreign laboratories.

However, factories always say the sucrose content is too low to justify their claims that Indonesia needs to import more sugar, Arum said, adding factories find it more profitable to import than to produce sugar.

Minister of Agriculture Bungaran Saragih defended sugar factories and blamed growers for their inefficient farming practices, saying in Cuba, sugar factories were older than those in Indonesia, but were still able to produce more.