Indonesian sugar refineries shut as govt chokes raw imports

[JAKARTA] Indonesia's sugar-refining industry expects a third of the country's 11 plants to shut temporarily by the end of the month after one of the world's top buyers of raws cut its import quota for the sweetener despite a likely increase in demand this year.

Agro-food imports more than quadrupled in the decade to 2013 and Indonesia is pushing to restore self-sufficiency within four years, in part by reducing imports.

The Southeast Asian country usually buys sugar from Brazil, Thailand and Australia and the industry is pushing the government to allow more shipments to prevent closures.

According to the refining industry, this year's government quota of 2.8 million tonnes for raw sugar imports has already been exhausted, forcing two plants to close already, with another two expected to follow this month unless new import permits are granted. "There are minimal stocks remaining. We estimate four plants will have shut down by the end of November," Riyanto Yosokumoro, secretary general of the Indonesian Sugar Refineries Association, told Reuters.

Some plants have cut production so they could continue operating until December, Yosokumoro said, adding that his office was waiting for the government to respond to its request to allow more imports. "(The government) is still calculating. We expect more - as much as the food and beverage industry demands," Yosokumoro said, adding the industry had forecast import demand would exceed 3 million tonnes this year, with estimated growth of around 7 per cent a year.

With its rich volcanic soil, the archipelago was once self-sufficient in rice and sugar, but as with many other food crops, output has gradually fallen due to competition for farmland from either cash crops such as palm oil or from housing as the population booms.

Indonesia has cut its 2014 sugar production target to 2.3 million tonnes from around 2.5 million in 2013.

Last year the country was forced to abandon its goal of self-sufficiency in sugar by 2014. Imports are estimated to have been at least 3 million tonnes in 2013.

Indonesian trade ministry officials could not be reached for comment.

REUTERS