Sugar factories closed due to cane shortage

BANDUNG (JP): Three of eight state-owned sugar factories in West Java have been closed down due to a prolonged shortage of sugarcane supply from farmers.

Mulyadi, head of plantation directorate of the provincial Ministry of Agriculture and Plantation's office, said sugar factories in Gempol, Jatiwangi and Kadipaten had to stop their operations after suffering from big losses over the last nine years.

In 1990 there were about 15,254 hectares of sugarcane plantations in West Java, but the number dropped by 30 percent last year, he said.

Demand for domestic sugar declined due to the fact that the price of imported sugar is cheaper than the local product which in turn led to lower sales and a drop in the area of sugar plantations.

PT Rajawali Nusantara, a state-owned firm which manages sugar factories in the province, is only able to maintain factories in Karang Suwung, Sindang Laut, Tersana Baru, Subang and Jatitujuh, said Mulyadi.

"PT Rajawali Nusantara suffers between Rp 4 billion and Rp 12 billion in losses per year due to scarcity of raw material," Muladi noted.

Meanwhile, a provincial councillor Yudi Widhiana Adi revealed that the remaining five sugar factories in West Java are also facing serious shortages of sugarcane supply, as most banks in the province are still reluctant to provide cheap credit for sugarcane farmers, an official said on Saturday.

Only state-run bank BNI and Bukopin have agreed to provide loans with some Rp 25 billion and Rp 10.5 billion in low interest credits from the respective banks said to be at hand.

Yudi said there is hope the situation may be improving for sugarcane farmers in the future as sugar prices are getting better.

"But banks are still reluctant to channel credit, although the business is quite promising," said Yudi.(25)