ASEAN KEY DESTINATIONS
Government to cut refined sugar distribution chain
The Trade Ministry is vowing to tighten the distribution of refined sugar to avert further leakages into the end-consumer market that may push down local sugar prices.
Trade Minister Muhammad Lutfi said it would cut the distribution chain of that type of sugar through direct delivery to the food and beverage industry. At present the sugar is traded through distributors and sub-distributors before reaching its industrial customers.
“I want to ensure the refined sugar, the raw material of which is imported, is really supplied to the manufacturers that use it,” he recently said.
Lutfi added that the new arrangement would apply to refined sugar made from raw sugar imported in the second half of this year.
This decision will be in line with the expectations of the Sugarcane Farmers Association (APTRI). APTRI has demanded that a Trade Ministry ruling on the sugar trade, which allowed sales of refined sugar through distributors and sub-distributors, to be scrapped, since it has made circulation harder to control because of the ongoing leakages.
Indonesia, the biggest sugar consumer in Southeast Asia, divides the sugar industry into two categories: the white sugar industry, which processes sugarcane from domestic farmers, and the refined sugar industry, which processes imported raw sugar.
The white sugar industry supplies sugar for household consumption that is sold in the end consumer market, while the refined sugar industry can only sell the commodity to other industries, notably to the food and beverage industry.
This year the government allocated an import quota of up to 3 million tons of raw sugar, which serves as the base material for the domestic refining industry. However, it slashed the quota by 187,000 tons to punish refiners who contributed to the leakage of refined sugar into the end consumer market last year.
Based on an official sugar audit, 110,799 tons of refined sugar leaked into the end consumer market in 15 provinces, pushing down the domestic sugar price.
As of July, importers had delivered 2.1 million tons into the country to 11 refineries.
Trade Ministry director general for foreign trade Partogi Pangaribuan said Friday that his office had issued new import permits for inbound shipments of 502,000 tons of raw sugar, out of the total of 635,000 tons planned on Thursday.
“If we don’t pass the permits soon, there will be a shortage for production [in refineries] next month,” he told reporters at his office.
However, he did not elaborate when the permits for the remaining 133,000 tons would be issued.
The Indonesian Refined Sugar Association (AGRI) has reportedly complained to the Industry Ministry about the delay in issuing permits, claiming that it could badly effect the food and beverage industry. It also claimed that sugar refineries have seen their raw sugar stockpiles shrink to a very low position.
In addition to trying to stop refined sugar from leaking into the end consumer market, the Trade Ministry had stopped importing white sugar to maintain prices at a favorable level for domestic sugarcane farmers and sugar producers.
The ministry vowed to import no more white sugar until the end of this year, other than the 22,000 tons delivered by state-owned logistics firm Bulog from Thailand between April 1 and May 15, as the domestic supply is otherwise sufficient to meet local needs.
Earlier, it allowed Bulog to secure 328,000 tons of white sugar as a buffer stock.
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