In response to rising demand and local sugar production shortages, Indonesia’s National Food Agency has announced plans to import 215,000 tons of sugar. With a population of over 270 million, Indonesia is the world’s fourth most populous country and has a significant demand for sugar in both household consumption and industrial usage. The decision to import such a large quantity of sugar has been criticized by some, who argue it will harm local farmers and undermine efforts to achieve self-sufficiency in sugar production. However, others have welcomed the move as necessary to ensure an adequate and stable sugar supply for the country.
The Indonesian government has recently announced that it will import 215,000 tons of sugar in order to maintain the national supply and anticipate increased demand during the fasting month of Ramadan and Eid al-Fitr. The decision to import was agreed upon during a ministerial coordination meeting in January, with the move aiming to maintain stability in food supply and prices and improve the government’s food reserves.
The import will be conducted by two state-owned food enterprises; ID Food and plantation holding company PTPN. All licensing processes from the Ministry of State-Owned Enterprises and the Ministry of Trade have been conducted, with the sugar import set to arrive in stages. During the March-May period, 99 thousand tons of white crystal sugar will arrive at the three ports of Tanjung Priok in Jakarta, Tanjung Perak in Surabaya, and Belawan in Medan.
According to the Head of the National Food Agency, Arief Prasetyo, domestic sugar production during the January-December 2023 period is expected to reach 2.6 million tons, while demand during the same period is projected to reach 3.4 million tons. Therefore, there will be a lack of supply that must be covered with import to prevent scarcity because this year’s fasting month and Eid will fall ahead of the sugar milling season.
Based on the NFA’s food prices panel on March 24, the average price of sugar at the consumer level is stable at Rp14,416 (around US$0.95) per kg since October 2022, still below its selling reference price (HAP). The reference price for sugar at the consumer level was set at Rp14,500 per kg, according to NFA Regulation No. 11 of 2022.
The decision to import sugar comes after Indonesia experienced a sugar deficit last year, with production of the commodity falling short of the demand. However, the shortfall was filled by imported sugar from other countries, including Guatemala, India, and Switzerland.
The government’s decision to import sugar is also aimed at ensuring adequate food supplies during the Covid-19 pandemic. The pandemic, which started in late 2019, has affected the economy and the food supply, with disruptions to supply chains and trade flows.
The sugar import is also aimed at maintaining stable food prices throughout the year, including during the Muslim fasting month of Ramadan, where food prices traditionally increase due to higher demand.
In conclusion, Indonesia’s decision to import 215,000 tons of sugar is aimed at maintaining food security and stability in prices during the Covid-19 pandemic and the upcoming Muslim fasting month of Ramadan. This move is also expected to prevent scarcity caused by the lack of supply due to domestic production falling short of demand projections.