Government call to ramp up sugar production bearing fruit but price remains high

Domestic sugar manufacturers have begun to ramp up production capacity in response to the government’s call to stabilize prices ahead of the Ramadan festivities as the COVID-19 pandemic has disrupted supplies, a top official has said.

Ten refined sugar manufacturers have produced around 90,000 tons of consumer sugar out the 250,000-ton target from the government to overcome the domestic shortage that has led to soaring prices, said the Trade Ministry’s domestic trade director general Suhanto.

Sugar currently trades at up to Rp 18,300 per kilogram in cities around Indonesia, 46 percent higher than President Joko “Jokowi” Widodo’s target of Rp 12,500 per kg.

“But even the additional production has yet to lower prices,” Suhanto told reporters on the sidelines of an online briefing on Tuesday. “This is because this production cannot balance consumption.”

Indonesians consume 230,000 tons of sugar per month, while domestic producers only produced 42,000 tons in March, with harvests delayed because of the prolonged dry season. The rest of domestic consumer sugar demand is met through imports with shipments of the key commodity disrupted by COVID-19 travel restrictions around the world.

Prices of staple foods are key to supporting purchasing power in Indonesia’s economy, more than half of which is made up of consumer spending. The annual Ramadan and Idul Fitri festivities, from April 24 to May 25, is the peak season for consumer spending in Southeast Asia’s largest economy.

“Make sure the distribution goes well so that provinces facing staple food deficits can source the supplies from provinces with a surplus,” Jokowi said in an online briefing on Tuesday. “The transportation of goods between provinces and islands should be free from any disruptions.”

The Trade Ministry has granted permits to import over 683,000 tons of raw sugar, only 41 percent of which had arrived as of April 20.

The ministry also granted permits for 50,000 tons of sugar imports to the State Logistics Agency (Bulog), which is responsible for securing domestic staple food stocks, as well as state firms PT Rajawali Nusantara Indonesia and PT Perusahaan Perdagangan Indonesia.

“We realize, however, that with countries under lockdown, sugar supplies from overseas are also delayed,” said Suhanto.

The Trade Ministry, therefore, is partnering with the National Police’s food task force to monitor sellers to prevent both hoarding and price gouging. Moreover, the ministry is planning to shorten the distribution channel for consumer sugar.

The National Police’s Criminal Investigation Department (Bareskrim) chief Comr. Gen. Listyo Sigit Prabowo said firms found selling sugar above the price ceiling and engaged in hoarding and price gouging would face both administrative and criminal sanctions, including suspension of permits.

“We have formed a team with the food task force to monitor the distribution,” said Trade Minsiter Agus Suparmanto, a National Awakening Party (PKB) politician. “Producers should distribute the sugar directly to modern retailers and traditional markets through their distributor partners.”