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Workers unload sacks of sugar from a ship at Jakarta's Tanjung Priok port. (Photo: Jurnasyanto Sukarno, JG)

Sugar Imports to Ease Prices Next Month: Indonesian Govt

In news that may satisfy the nation’s sweet tooth, the Agriculture Ministry announced on Monday that imported sugar would begin entering the domestic market by early January, pushing down high prices in Southeast Asia’s biggest consumer of the commodity.

“Before the 10th of January, some [of the imported sugar] should come into the market,” said Bayu Krisnamurti, vice minister of agriculture. The Trade Ministry issued permits on Dec. 7 to six state-owned companies to import 500,000 tons of white sugar by April 15 to help alleviate high prices, according to Bloomberg.

Although sugar prices have fallen to about Rp 9,500 to Rp 9,700 ($1 to $1.02) per kilogram from a peak of Rp 10,700 during Idul Fitri in September, many households still feel prices are too high, especially compared with Rp 6,600 per kg in January.

Bayu added that the government planned to hold cheap sugar markets in several large cities in an attempt to get sugar to the nation’s poor.

“The cheap markets will target 17.5 million low-income families with prices set at Rp 1,500 to Rp 2,000 below local retail prices.”

Analysts say domestic sugar prices remain high because local output is not expected to meet demand, which also leads producers to stockpile the commodity. Industry players have been voicing concerns that the nation is in danger of running out of sugar by early February as the current supply has been quite low.

Natsir Mansyur, chairman of the Association of Sugar and Flour Traders (Apegti), slammed the government’s policy, saying the imported sugar would not lower domestic prices because global prices had already escalated.

“The government has been wrong from the start. They will only begin buying sugar early in January next year, meanwhile other countries did forward buying in September,” Natsir said.

“The international price now sits at $720 per ton from $680 as of last week. There’s nothing the government can do to tame sugar prices. This should be a lesson for the government to have good planning and strategy in sugar management,” said Natsir, adding that England, Malaysia and India had concluded forward-buying contracts in September, when prices ranged from $530 to $560 per ton.

International sugar prices have soared as excess rain in Brazil and drought in India have hampered cane output from the world’s top producers. But prices are also expected to rebound internationally in 2010 as the global economic recovery continues.

Thomas Darmawan, chairman of the Indonesian Food and Beverage Association (Gapmmi), said soaring sugar prices would raise food costs because the sweetener was often a vital ingredient.

“We are well aware that commodity prices including sugar will be higher next year. It’s definitely going increase the price of some food and beverages, some of which use up to 60 percent sugar as an ingredient.”

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