PRODUCERS CONCERNED OVER FALL OF SUGAR PRICE

By Andi Abdussalam

Jakarta, May 25 (ANTARA) - Producers have expressed concern over the entry into the retail market of imported refined sugar and the downward trend of crystal white sugar price since last month which, they said could disadvantage sugar cane farmers.          "We are concerned over the declining sugar price; if this continues to take place, we are afraid we would not be able to cover production cost. After all, the government has set a benchmark price for farmers at Rp7000 per kg," Djoko Santoso, secretary of state-owned sugar cane plantation company PTPN X, said.          PTPN X has set itself the target of producing 500 thousand tons of sugar this year, a target which was higher than that in the previous year at 410 thousand tons. It would do its best to optimize the capacity of its factory and increase production efficiency in an effort to achieve the target.         "We will optimize the existing capacity, replace ineffective equipment, increase the factory performance and economize energy consumption," he said.          PTPN X is still able to increase its crystal while sugar production if the government allows it to import raw sugar to be processed into crystal sugar by its remaining idle factory capacity.          This year it has asked permit for the importation of 50 thousand tons of raw sugar to be processed into about 45 thousand tons of crystal white sugar.          However, the company's optimism to increase its production is overshadowed by fear of possible price fall of crystal sugar in the domestic market. Since the beginning of the milling season, in late April and early this month, the sugar price in the retail market has been showing a downward trend.       The average national sugar price in April was Rp10,832 per kg. It dropped to Rp10,730 per kg in the first week of May and Rp10,714 per kg in the second week.  Yet, at present the price is still higher than that in the same period a year earlier which was Rp10,443 per kg in April and Rp10,234 per kg in May.         Djoko said that his company was afraid it would be unable to cover its production cost if prices continued to fall, while the government has set the benchmark price at Rp7000 per kg at the farmer level.          Based on the trade minister's decree, this year the benchmark price at the farmers' level is set at Rp7000 per kg, much higher than the previous year's benchmark at Rp6,350 per kg.  The Rp7,000 benchmark price is effective as of May 4, 2011.          The benchmark price was set by taking into account the proposal of the agriculture minister who is also the chairman of the Indonesian Sugar Council (DGI).          Director General for Internal Trade Gunaryo said that the government set the benchmark price as a reference for the purchase of the farmers' crystal while sugar to ensure that farmers would get reasonable profit and consumers would buy it with a reasonable price.          Expert staff of the Indonesian Sugar Association, Colosewoko said the government should take into account the interest of farmers as producers and of consumers in setting the benchmark price.          "Producers want to cover their production cost and get a reasonable profit while consumers are willing to buy sugar with prices within their financial reaches. Thus, the government should accommodate these two interests by setting a fair level of prices," Colosewoko said.          As regards, the price in the retail market should not fall to a too low level which could cause producers to be unable to cover their production cost.          However the downward trend in the sugar price in the retail market has created concern for producer. After all, imported refined sugar was believed to have entered consumption market which could disturb local sugar products.          Earlier, Chairman of the Indonesian Canesugar Farmers Association (APTRI) Arum Sabil said his side had found refined sugar circulating in the consumption market.         "The circulation of refined sugar for industries in the retail market disturbs farmers' sugar because it is sold at a lower price. We urge that the circulation of refined sugar should be put in order based on regulations," Chairman of the Indonesian Canesugar Farmers Association (APTRI) Arum Sabil said.          He said this could have happened because production of refined sugar exceeded the need of food and drink industries. The remaining then entered the consumption market.          Therefore, the government has called on refined sugar producers to discipline themselves and supply refined sugar only to food and beverage industries in accordance with  existing regulations so as  not to disrupt the  crystal or consumer sugar market.          "We have summoned eight refined sugar producers and asked them to call themselves to order so that no refined sugar will enter the consumer sugar market," Director General for Internal Trade Affairs Gunaryo said.          The government has also asked the producers to assign clear distributors, sub-distributors and to popularize regulations to them. "We ask them to assign clear distributors where each of the distributors is required to sign an integrity pact to make sure that there would be no refined sugar leaked to the retail market," the director general said.          He said that the government would also reinforce the integrated goods monitoring team in supervising the distribution of refined sugar to foods and beverage industries.          Secretary General of the Indonesian Refined Sugar Association (AGRI) Suryo Alam said his side was ready to help monitor the distribution of the refined sugar.          This year, he said, the government allowed the importation of 2.4 million tons which after a process would only amount to about 2.2 million tons. The need for refined sugar of industry this year is estimated at between 2.2 million and 2.3 million tons.          So, Suryo said, it is unlikely for refined sugar to enter the retail market because the government only allowed the importation of raw sugar based on the volume needed by industries.***5*** (T.A014/ A/H-NG/A014) 25-05-2011 12:35:4