January 06, 2015
The Jakarta Post
By Linda Yulisman
A large amount of refined sugar leaked into the end-consumer market last year, a mishap that has resulted in price distortion in Southeast Asia’s largest consumer of sugar.
Almost 200,000 tons, more than 11 percent of the total 1.7 million tons of refined sugar produced by 11 producers between January and July 2014, spilled into the market that serves households, according to a recent sugar audit carried out by the Trade Ministry and independent surveyors.
The figure is nearly double the more than 110,000 tons of refined sugar leaked in 2013, forcing the ministry to cut the raw sugar import quota by 187,000 tons in the past year, as excess stocks of refined sugar had lowered the price of white sugar and hurt domestic sugarcane farmers.
The refined sugar, made of imported raw sugar, is intended to solely supply the food and beverage (F&B) industry, including a small number of small and medium enterprises (SMEs), while the end-consumer market takes up white sugar produced by local mills using sugarcane planted by farmers.
As a follow-up to the leakage discovery, the government was intending to tighten the issuance of import licenses for raw sugar, as well as strengthen supervision over the distribution of refined sugar, Trade Minister Rachmat Gobel said.
“Stricter rules on the import and distribution of sugar are expected to prevent refined sugar from entering the consumer market while also keep securing the needs of the F&B industry,” he said in a statement released on Sunday evening.
In a change to previous arrangements, permits for the import of raw sugar will be issued each quarter instead of annually.
In addition, refiners will be obliged to supply at least 85 percent of their total output directly to the F&B industry before they can release the rest through distributors.
Furthermore, refined sugar distributors will be required to be registered at the Trade Ministry.
In response to lobbying from the food and beverage industry, the ministry last month passed an import quota of 600,000 tons of raw sugar to meet the needs of the refining industry in the first quarter of this year.
That was out of 2.8 million tons set as an indicative figure for 2015, which will be similar to 2014.
The government previously prohibited the sale of refined sugar through distributors and sub-distributors to help overcome leakage and later considered appointing cooperatives to channel the refined sugar to SMEs.
Trade Ministry director general for domestic trade Srie Agustina said on Monday that the results of the sugar audit may push the government to impose sanctions, such as reductions of import quotas for disobedient sugar refiners.
“We will consider the period [of punishment] in the second, third or fourth quarter of this year,” Srie said in a text message.
Sugarcane Farmers Association (APTRI) chairman Soemitro Samadikoen said the leakage proved that refined sugar output was still higher than actual demand from the F&B industry, and so the government should slash the import quota of raw sugar to between 1.5 million and 1.8 million tons.
“In case of a shortage, the quota can be raised as and when,” he said.
Reference link: http://www.thejakartapost.com/news/2015/01/06/massive-leak-refined-sugar...