JAKARTA: Indonesia must issue 2015 raw sugar import permits this month or face further closures of refineries and shutdowns at food and drinks businesses, an industry group in the world’s top importer said, warning the situation was at crisis point.
Last week, Indonesia’s sugar-refining association said it expected a third of the country’s plants to shut temporarily by the end of the month after the government cut import quotas for the sweetener this year despite rising demand.
A prolonged shortage of raw sugar may dent revenue at refinery owners such as Olam International and Wilmar International, leading to smuggling and push up domestic white sugar prices.
“If there is no decision by December, there will be a critical situation from January onwards,” Adhi Lukman, chairman of the Indonesian Food and Beverage Industries Association, said.
Raw import quotas for this year were cut after lobbying by sugarcane farmers and millers, who say white sugar stocks are high and that sugar refined from foreign raws had fed illegally into the household market.
Indonesia’s sugar industry is split in two and is tightly regulated. Households, retail and small-to-medium firms rely on domestic white sugar supplied by a network of older mills, while modern refineries import raws for large-scale food and beverage industries, mostly from Brazil, Thailand and Australia.
Government officials put white sugar stocks at 900,000 tonnes, said Lukman, adding that domestic whites were expensive due to a government floor price of 8,500 rupiah (RM2.37) per kg and were not of the quality demanded by industry.
The trade ministry cut the quota for raw sugar imports this year by seven per cent to 2.8 million tonnes, Lukman said, forecasting that refined sugar demand from industry would climb seven per cent to 2.9 million tonnes this year, then to 3.1 million next year. Reuters