Sept 19, 2012
Indonesia's struggle to boost sugar output due to competition for land and under-investment is forcing the country to spend heavily and become the world's biggest importer of the sweetener in place of China, which has ramped up domestic output. Sugar consumption in Indonesia, the world's fourth most populous country with around 240 million people, is seen growing around 4 percent annually, according to the International Sugar Organization (ISO).
"We forecast that Indonesia will import 2.15 million tonnes of raw sugar in 2012/13 (October/September), which will make the country the world's largest raw sugar importer," said Sergey Gudoshnikov, a senior economist with the ISO.
"They are condemned to seek large-scale imports." Yamin Rahman, executive director of the Indonesian Refined Sugar Industry Association, said, "Our raw sugar imports are big because our population is large and our domestic sugar output is not enough to meet our demand."
Indonesia has eight refineries, the majority of which were built in the last decade, and two are now under construction, according to Czarnikow data. Both China and Russia have taken advantage of rising costs of sugar production in number 1 grower Brazil, which contributed to higher global prices, to develop their own domestic output. Difficulty in finding land in the main growing regions of Java and adverse climatic conditions has had a restraining influence on Indonesia.
"There has been a huge investment in refining capacity because of the difficulties faced in increasing domestic production," said Toby Cohen, a director of Czarnikow, a London-based commodities house.
"Indonesia is a much steadier picture than China." China will stockpile 500,000 tonnes of sugar from the domestic market starting from Sept. 20 to help stabilise local prices and protect farmer interests, an industry website said on Tuesday, citing a government document.
Adhi Lukman, chairman of the Indonesian Food and Beverage Industries Association, said Indonesian authorities were still trying to develop local production from sugarcane. "The target of the government, is to establish more sugar factories based on sugarcane," he said.
Raw sugar consumption in Indonesia's food and beverage industries will climb by 10 percent annually for the next five years, an industry group said on Monday, as the country's booming population boosts domestic demand.
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