Jakarta, Indonesianpost.com – Facing a spike in sugar prices, Indonesia’s state-owned company, ID Food, is taking action. They’re importing 125,000 tons of sugar to stabilize local prices. To make this happen, they’ve secured a loan of Rp 1.5 trillion (around US$95.97 million) from state-owned banks.
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This move also prepares for the end of the sugar milling season in November. ID Food’s President Director, Frans Marganda Tambunan, reassures that they will fulfill the government’s order to import 250,000 tons of sugar this year. So far, only half of that quota has been used, and they need to stock up on sugar for domestic needs.
Indonesia has an annual sugar deficit of a whopping 800,000 tons, so they have to import from other countries. But this year, India, a major sugar supplier, has banned exports until next year. This leaves Brazil and Thailand as the main options. ID Food chose Brazil because their sugar matches Indonesian demand better, although it will take longer to arrive due to the distance.
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The imported sugar will take nearly two months to reach Indonesia, according to Frans. Meanwhile, sugar prices are soaring. Retail prices have reached Rp 15,400 per kilogram, up 7.76 percent from last year. This is well above the government’s set price of Rp 14,500 per kilogram, which was increased from Rp 13,500 per kilogram in August.
To support local farmers and stop falling prices, the National Food Agency raised the farm gate price to Rp 12,500 per kilogram in July and then to Rp 13,400 per kilogram. This will lead to higher prices for consumers.
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In a separate development, there’s an ongoing investigation related to corruption in sugar imports between 2015 and 2018. Frans says this won’t affect the government’s plan to import more sugar.