DOMESTIC SUGAR INDUSTRY LACKING COMPETITIVE EDGE

By Andi Abdussalam

Jakarta, Aug 29 (ANTARA) - The competitive edge of the country's sugar industry is still low so that the government should focus attention on increasing it if it is willing to create sugar self-sufficiency in 2014, a former agriculture minister says.              The competitive edge of domestically produced sugar should be increased because ahead sugar could no longer be protected by fixing an official price.              Low competitiveness of the country's sugar could be seen from the big margin between the price of domestic sugar and that of overseas.              "Up to now the price still shows significant difference, namely about Rp3000 per kg. This would cause sugar-based industry unable to compete with the same industry abroad," former agriculture minister Anton Apriantono said.              On the other hand, the average production of Indonesia's sugar industry is also low, namely about 6.2 tons of sugar crystal per hectare in 2009, which is far lower than sugar production in Java in the 1970s.  Production at that time could reach an average of 10 tons of sugar crystal per hectare.              The productivity of sugar industry at home is far lower compared with the average productivity of sugar industries in sugar producing countries like Australia, Egypt, Brazil, the United States, Colombia, Mexico and India.              The main factor that causes low competitiveness in the country's sugar industry is low productivity and inefficiency in the production sector. In addition, Indonesia is still importing raw sugar to the amount of about 2.13 million tons.              Therefore, the government should give attention to increasing the competitiveness of the country's sugar. It should improve the health conditions of the inefficient sugar factories in Java, expand sugar cane plantations and build new sugar mills.              "It is better for the government to use sugar import duty funds for increasing the productivity of the country's sugar cane plantations, making sugar mills more efficient and building new sugar factories," Anton Apriantono said.              In the meantime, Deputy to Chief Economic Minister for Agriculture and Maritime Affairs, Diah Maulida said so far some of the sugar import duty funds had been used to increase plantation productivity and to assist sugar cane farmers.              "Certain amount of the funds are allocated to the Agriculture Ministry which provides some of it for increasing productivity and assisting sugar cane farmers," Diah said.              The government also has an  action plan to achieve its self-sufficiency in sugar target in 2014 through increasing productivity, expanding plantations, revitalizing old sugar mills and carrying out institutional re-arrangement.              "For the revitalization of sugar mills, the government has worked out a road map and detailed plan to actions in the ministry of industry," Diah said.               With regard to the government plan to import sugar, Diah said that it was recalculating its sugar production and stocks. The import of crystal white sugar was to meet the need in the first five months next year.              "We at the end of this August recalculate the needed stocks because some have been pessimistic that production at home in 2011 would drop to only 2.2 million to 2.3 million tons. Stocks at the end of the year might decline to 800 thousand tons to one million tons so that they could not meet the need for the following five months,"  Diah Maulida said.               The plan to import sugar was also expressed by Trade Minister Mari Elka Pangestu on separate occasion. She said that Indonesia would import white crystal sugar to meet the people's need in the first five months in 2011.              "Due to long wet dry season this year, the sucrose content of sugar cane is expected to drop so that sugar production is also expected to decline to below target. We estimate production would be at 2.5 million tons, or about 200 thousand tons lower than the target," she said.              So, the minister said, the government would take an anticipatory step after it finalized its estimates on production, the needed stocks and imports.              Diah and Mari however assured that stocks would be enough until the end of the year. "There is no need to worry about stocks until the end of the year. We will import sugar only for the first five months of 2011," she said.              Earlier, President Director of state-owned Logistics Agency (Bulog) Sutarto Alimoeso said the white sugar production  was predicted to drop from 2.9 million tons to 2.2 million-2.5 million tons this year due to less supportive climate condition.              With that condition, Chairman of the Indonesian Wheat and Sugar Traders Association (Apegti) Natsir Mansyur predicted that stocks of white crystal sugar would fall short by 400 thousand tons.              Diah said further that the government would also check the capacity of mills which were usually operated to process raw sugar. This is to see the possibility of importing raw sugar to meet the people's need for white crystal sugar.              "We are aiming at importing raw sugar so that we could obtain added values," she said.              Executive Director of the Indonesian Refine Sugar Association (AGRI) HM Yamin Rahman said if raw sugar was to be imported the government should soon issue permit for its importation because the milling season would end soon.              "Raw sugar should have already arrived in October before the milling season ends. License should have been issued this August because the import process would take time. After all, Brazil which is the main producer is far. It must take time to wait for our turn because all countries also buy sugar from Brazil," he said.***2*** (T.A014/a/ H-NG /a014) 29-08-2010 13:53:1