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Refined sugar has good market prospects amidst national sugar industry's sinking performance. (Industry Profile).

Since the economic crisis hit Asia, the price of sugar on the global market has been on the decline not only because of shrinking demand but also because of the depreciation of the currencies of sugar-exporting countries such as Brazil, Mexico, India, Pakistan, China, and Thailand against the U.S. dollar. The price of sugar on the global market has dropped to a level which is very attractive to Indonesian sugar importers.

Due to low import duties on sugar, to dumping practices which cut the price of sugar by 20%-30%, and to inappropriate ways of importing, imported sugar has been flooding the domestic market. As a result, the price of sugar on the domestic market has also been falling, pushing down the price of sugar canes (from farmers) and the profit margin of the national sugar industry.

The sugar-dumping allegations have arisen because a number of sugar-producing countries have an oversupply situation, forcing them to do residual trading. They prefer exporting the excess sugar, even at a slashed price, to keeping it stored in their warehouses because doing so costs a lot of money. Indonesia has been one of the destinations for their sugar residual trading, and this has posed a growing threat on local sugar producers.

Besides seeking to fulfill domestic sugar demand, the Government has also taken certain measures to salvage the national sugar industry. One of these measures was raising the import duty on sugar from 0% to 25%. Amidst the decline of the national sugar industry's performance, an opportunity has emerged for investment in the sugar-refining industry as the food and beverage industry is growing, having recovered from the crisis. At present, there is only one refined-sugar producer operating in Indonesia, and it is PT Bernas Madu Sari, whose production capacity is only 150,000 tons, very low compared to the domestic consumption of sugar, which was 540,000 tons in 2000.

Product Description

Sugar factories in Indonesia generally process canes into refined sugar through a one-stage processing system, turning out a product that can be readily consumed by users. On the other hand, sugar factories in other countries generally adopt a two-stage processing system, under which they process canes into raw sugar and, subsequently, raw sugar into refined sugar or double refined sugar.

The global trade of sugar knows two different commodities: (i) raw sugar, which is known as sugar no. 11 and is traded on the New York Stock Exchange, where it is normally, and (ii) refined sugar, which is known as sugar no. 5 and is traded on the London Stock Exchange. The two different types of sugar are traded on different markets and treated as different commodities. A finished product, raw sugar is marketed to consumers and food-processing industries. On the other hand, raw sugar is marketed to sugar refining factories. The two commodities have their own developments on the market, causing differences in price between them.

Technology-wise, there are three different types of cane processing: carbonizing, sulfating, and refining. Sugar factories in Indonesia generally adopt the carbonizing and sulfating processes, which produce sugar in the form of white crystals. The two processes turn out refined sugar with high contents of polarities, IU (Icumsa), rough particles, and SO2 or ashes, which is not good for food-processing industries --especially food and beverage industries.

Refining is the process of changing raw sugar into refined sugar or double refined sugar through a number of stages from carbonizing, filtering, ionizing, crystallizing, curing, to drying. This process produces high-quality refined sugar which is very good for food-processing industries, especially food and beverage industries. However, since the refining process requires more handling than any of the other two processes, the cost per quantum unit is also higher.

Number of sugar factories down

To this day, the sugar industry has remained concentrated in Java. However, due to the shrinking land for sugar cane growth in Java, of late there has been a new development in which new sugar factories are built in areas off Java. Currently, there are 64 sugar factories operating in Indonesia, of which 53, including one refining factory, are located in Java while the other 12 are located outside of Java. This number represents a decline from 71 in 1997 as a result of the closure of eight sugar factories in Java. The eight factories, some of which belonged to PTPN X, have been closed down because their operations were no longer economically feasible. The supply of basic materials to these factories was too low compared to their production capacities, resulting in their unit cost of production increasing and, hence, their competitive power plunging.

Generally, sugar factories in Indonesia adopt the double-sulfating process to produce sugar in the form of white crystals. Some, however, use the double carbonating process, and one uses the semi-refining process.

Producer of refined sugar

To this day, there has been only one producer of refined sugar operating in Indonesia, and it is PT Bernas Madu Sari (BMS), a state enterprise set up late in 1993. Located in Serang, Banten, BMS currently has an annual production capacity of 150,000 tons, which can be expanded to 250,000 tons to match the maximum capacity of its power plant.

In addition to BMS, there is one semi-refining factory on Java, and it is owned by PTP Nusantara, which has an annual production capacity of 40,000 tons. Although its semi-refined sugar products nearly fulfills the quality requirements imposed by the food-processing industries, these industries usually refine them further using their own sugar-refining facilities, which they have established specially with the purpose of making semi-refined sugar products fit for their use.

Acreage of cane plantation down 4.3% per annum

Sugar canes make the most important basic material for sugar. There are three categories of sugar-cane plantation in Indonesia: smallholders', state, and private plantation. Of the three categories, smallholders' plantation is by far the largest. In 1998, the acreage of smallholders' sugar-cane plantation declined from 218.2 thousand ha in 1997 to only 183.3 thousand ha, but it rose again to 189 thousand ha in 2000, which accounted for 51.6% of the total acreage of sugar-cane plantation in Indonesia.

Overall, despite an increase over the last two years, the total acreage of sugar-cane plantation in Indonesia dropped by an average of 4.3% for the past five years (1996-2000). The growth in the acreage of sugar-cane plantation has been very slow because smallholders are still not well-motivated to grow this commodity as yet. One reason for this may be the fact that the disbursement of the much-needed program credit for use as working capital has always been late and lower than expected. Another reason is the fact that on a number of occasions, there has been a shortage of fertilizers.

In the past, the disparity between the retail price and the floor price of sugar was not enjoyed by sugar-cane farmers and the sugar industry but, instead, went into the National Logistics Agency's (Bulog's) pocket. No wonder, sugar cane farmers had no chance to reinvest some of their income in order to increase the productivity of their land. Sugar producers faced a similar situation, as reflected by the fact that they did not have an opportunity to conduct internal restructuring and develop a sugar cane-based industry, which provides a significant added value.

Output down 31.9%

Over the past five years (1996-2000), Indonesia's sugar output fluctuated with the tendency to decline, despite the fact that consumption averaged 3 million tons per year. In 1994, the national sugar output reached as high as 2.5 million tons. In the following years, it kept on sliding down. In 1998, for example, it reached only 1.5 million tons, down 32% from the previous year. In 2000, however, it grew by 13.6%. Over 1996-2000, the national sugar output dropped at an average annual rate of 3.5%.

The decline in the national sugar production resulted from low productivity and from the low sucrose content of sugar canes. Besides, the increase in the acreage of sugar-cane plantation was not followed by a hike in the production of sugar canes and crystals. The production of crystals from sugar canes declined at an average annual rate of 7% while the sucrose content dropped from 8.03% in 1994 to 5.49% in 1998. This has had direct impact on the national sugar production. The sucrose content of sugar canes was still over 10% in 1975. Over the period of 1980-1990s, it continued to shrink, finally reaching only 6.79%.

Refined sugar output

Due to the food and beverage industry's growing demand for high-quality white sugar, the national production of refined sugar has shown the tendency to increase over the recent years. It rose by 102.4% to 148.7 thousand tons in 1999, although it dropped slightly to 110.8 thousand tons in 2000. Since the domestic production of refined sugar is still limited, Indonesia has been importing the commodity from, among others, Singapore and Dubai.

PT Bernas Madu Sari (BMS), the only refined sugar producer to operate in Indonesia, has an annual production capacity of 150,000 tons. This means that in 1999, the company operated at 99.16% of its capacity level. In view of this, BMS, which operates under the domestic investment (PMDN) scheme, has made a plan on expanding its production capacity to 250,000 tons -- a level which matches the maximum capacity of its power plant.

Productivity still low

One major reason for the decline in Indonesia's sugar output was the shrinking productivity of cane plantation. Although the productivity of cane plantation rose from 3.95 tons of crystals/ha in 1998 to 5.81 tons in 1990, it dropped again to 4.93 tons in 2000. In 1998, the total acreage of cane plantation was 325,715 ha, and it produced 1,491,553 tons of crystals. In 1990, the total acreage of cane plantation expanded to 364,977 ha, and the crystal output rose to 2,119,509 tons. In 2000, the total acreage of cane plantation shrank to 342,920 ha, and the crystal output to 1,693,851 tons.

The sharp drop in the productivity of cane plantation in 2000 was caused by both technical and non-technical factors. Among the technical factors were low-quality seeds, belated planting schedule, and problems related to land processing, fertilizers, and cutting. Of these factors, the most important was low-quality seeds. If Indonesia's sugar output is to increase, high-quality cane seeds should be used.

To increase the productivity of cane plantation, efforts should be made at applying the appropriate cane-planting technology consistently. As for high-quality seeds, sugar factories should produce them using the standard seed-development technology because that is one key to increasing the productivity of cane plantation. However, sugar factories on Java have difficulties obtaining land for use as flat seed-cultivation yards because most of them do not have their own cane plantation. To lease land for development into such yards is also a big problem because it requires considerable funding.

For the planting season of 1999/2000, an estimated 81,780 ha of smallholders' plantation was involved throughout Indonesia. With the assumption that 1 ha of flat seed-cultivation yard can fulfill the needs of 5 ha of cane plantation, some 16,356 ha of such yards was actually required for the planting season of 1999/2000. As regards Java, the acreage of cane plantation for the planting season of 1999/2000 was an estimated 77,350 ha, requiring some 15,470 ha of seed-cultivation yard.

It is not easy for sugar factories on Java to make available land of that size for seed-cultivation purposes because most of them do not own land. To lease land would cost them some Rp 4 million per hectare, and this means that sugar factories on Java would have to make available some Rp 61.8 billion in funds to lease 15,470 ha of land for seed-cultivation purposes. If such funds were obtained from banks at a commercial interest rate of 25%, the sugar factories would have to produce some Rp 15.4 billion in funds just to pay the interest.

Seen from the current financial condition of sugar factories, it seems difficult for them to develop seed-cultivation yards using commercial credit from banks. Soft loans from the Government may be required by sugar factories to enable them to produce high-quality seeds so as to increase the productivity of cane plantation.

Capacity small

Indonesia's sugar industry has certain characteristics which are not supportive of efficiency-improvement efforts. The processing capacity of a sugar factory averages 1,000-12,000 tons of canes per year. Most of the sugar factories on Java are small-scale ones. Of the 54 sugar factories on Java, most have a processing capacity of 1,000-5,000 tons of canes per year. Only four have a processing capacity of over 5,000 tons of canes. On the average, sugar factories on Java have a processing capacity of only 2,750 tons of canes per year, and those outside of Java over 5,000 tons.

Sugar refining industry attractive to investors

Today, it is no longer possible to rely on Java to play a significant role in increasing the national sugar output. In view of this, the Government is seeking to build new sugar factories outside of Java. However, given that developing a sugar factory requires considerable investment and carries high risks, the large-scale plantation scheme needs to used to develop and expand the sugar industry.

Data from the Investment Coordinating Board (BKPM) shows that for the period of 1999-August 2001, four new projects in the sugar industry were approved, of which three were on the production of refined sugar. The other project belongs to PT Karya Agro, a joint venture operating under the foreign investment (PMA) scheme. Located in the West Sumatra district of Lima Puluh Koto, PT Karya Agro's sugar-cane plantation and sugar factory will commence operations in October, 2002. The company will have a capacity to produce 3 million tons of sugar canes and 300,000 tons of sugar per year. The foreign investor in PT Karya Argo is the Singapore-based TEC Investment Holding Incorporated. According to the BKPM license for PT Karya Argo, which was issued in 1999, this project requires an investment commitment of US$ 325 million.

Of the three projects in the production of refined sugar, the largest one belongs to PT Lampung Multi Manis and is located in South Lampung. With an investment commitment of Rp 474.9 billion, PT Lampung Multi Manis will have a capacity to produce 540,000 tons of refined sugar per year. The other two belong to, respectively, PT Jawa Manis and PT Dharmapala Usaha Sukses. PT Jawa Manis' project is located in the West Java district of Serang and requires an investment commitment of Rp 180 billion. It will have a capacity to produce 150,000 tons of refined sugar per year. On the other hand, PT Dharmapala Usaha Sukses' project is located in Gresik, East Java and requires an investment commitment of Rp 194 billion. With this project, the company will have a capacity to produce 250,000 tons of refined sugar per year.

Monopoly over white and raw sugar trading

In the past, sugar was classified as a strategic commodity and, as a result, its trading was monopolized by the Government. In October 1998, however, the Government took certain measures concerning sugar, e.g. discontinuing sugar subsidy and the floor price system, as part of its preparations to enter the free trade era. Subsequently, in February 1999, the Government lowered the import duty on sugar to 0% and revoked Bulog's monopoly over the import of the commodity.

The exemption of sugar from import duties has made life difficult for the sugar industry on Java because it directly resulted in the price of sugar on the domestic market declining. The government policy on purchasing sugar from farmers at Rp 2,500 per kg did not help much. As an illustration, a hectare of land produces 70,000 kg of sugar cane. Given that the sucrose content is 6.5%, one hectare of land produces only 2,900 kg of sugar. At Rp 2,500 per kg, the farmer received only Rp 7.7 million per hectare while the total cost of sugar production at the farmer level was around Rp 9-10 million per hectare.

In view of the above, the Government re-adopted the import duty system on sugar effective as from 1 January, 2000, applying a 25% import duty on refined sugar and 20% on raw sugar. This policy had effects on the procurement of the basic material for refined sugar, causing PT Bernas Madu Sari (BMS), the only producer of refined sugar to operate in Indonesia, to lose its competitive power on the domestic market. In view of this, the Government issued Decree of the Minister of Finance No. 135/KMK.05/2000, allowing BMS to pay a reduced import duty of only 15% on the basic material. In addition, the decree also allows the company to pay reduced import duties on machinery and goods.

The current structure of import duties on raw and white sugar is not very protective of farmers' interests and is not supportive of the development of the sugar industry. In fact, the WTO allows Indonesia to apply an import duty of up to 110% in the case of an import volume of more than 148,000 tons. At least, the difference between the import duty on raw sugar and that on white sugar can be maintained at, at least, 15%, e.g. 20% on raw sugar and 35% on white sugar. This kind of structure is commonly applied by other countries to encourage the development and expansion of the sugar industries and, at the same time, to protect the interests of their sugar-cane farmers.

To prevent raw sugar from direct consumption by people, a regulation needs to be made which allows the commodity to be imported only by sugar refineries and by the industries which can process raw sugar into a product that is ready for consumption. Such a regulation is already in place in Malaysia.

At this stage, Southeast Asian countries can understand Indonesia's stance as regards its needs to protect its cane farmers. They have agreed that Indonesia include sugar in the highly sensitive list. This agreement, given during the Southeast Asian Trade Ministers' September 2001 Meeting in Hanoi, means that Indonesia can impose an import duty of 25% on sugar in 2001 and 20% in the following years until 2010. Until then, sugar was included only in the temporary list, which required that Indonesia lower the import duty on the commodity to 20% in 2006, to 15% in 2009, and finally, to 5% in 2010.

Nevertheless, the agreement is still a far cry from the expectation by sugar producers in Indonesia, who want the Government to impose an import duty of as high as 65% on sugar. On the other hand, the Government is worried that if the import duty on sugar were too high, there would be an influx of illegally imported sugar. Even at the current rate of 20%-25%, the Government already seems helpless in handling naughty importers who import sugar into Indonesia illegally by means of manipulating the import documents.

Floor price increased

Decree of the Minister of Forestry and Plantation Estates No. 282/Kpts-IX/1999 stipulates that the floor price of sugar be increased further to Rp 250,000 per 100 kg and requires that sugar factories purchase sugar from farmers. According to the decree, the Government will also provide a subsidy to cover the losses suffered by farmers from such purchases by the Government.

Volume of sugar imports high

One indication that the influx of illegally imported sugar into the domestic market has been increasingly high is that data from the Directorate General of Customs and Excises show that the officially recorded figure on the import of sugar has been on the decline although it has remained high. The volume of sugar imports for 2000 is recorded at 1.56 million tons, down 28.8% from 2.19 million tons for the previous year. As for the value of such imports, it dropped by 51.9% from US$ 528.7 million in 1999 to US$ 254.1 million in 2000.

Sugar imports started to cost Indonesia a lot of money in 1995, when the volume reached 543,300 tons (worth US$ 245.4 million). In the previous year, the volume of such imports was only 118,800 tons (worth US$ 43.4 million). The rapid surge in sugar imports over the recent years has been caused by growing domestic demand and by the low performance of the sugar industry due to a number of problems, e.g. the shrinking supply of basic materials from local sources. In 2000, the domestic demand for sugar was 3.3 million tons while the national output was only 1.7 million tons, causing Indonesia to import 1.6 million tons.

Thailand the largest supplier

Indonesia imports sugar from a number of countries, of which Thailand has been the most important. In 1998, Thailand supplied Indonesia with 476,020 tons (worth US$ 183.5 million), which accounted for 49.3% of the total volume of the latter's sugar imports for the same year. The larger suppliers of sugar to Indonesia include Australia, which supplied the former with 103,549 tons (worth US$ 32.7 million) in 1998. The other suppliers such as China, Brazil, Mexico, and England supplied Indonesia with less than 100,000 tons each.

Raw sugar imports up steadily

Data on Indonesia's sugar imports includes raw sugar, which is used for various purposes --especially as a basic material for sugar-refining and pharmaceutical industries. Of late, the volume of sugar imports has been on the increase especially because the supply of molasses --the most important basic material for MSG-- on the domestic market has been declining. To overcome this problem, some MSG producers have been importing raw sugar for processing into MSG. Thus, the share of raw sugar in the total volume of Indonesia's sugar imports has been high. In 2000, for example, Indonesia imported a total of 1.56 million tons of sugar, of which some 549.2 million tons or 35.3% was raw sugar.

Price fluctuating

Due to dumping practices by the world's major sugar producers, the price of sugar on the international market has shown the tendency to continue falling. This caused the price of sugar on local markets to drop to Rp 2,950/kg in September 2001. However, it immediately resumed growth and reached Rp 3,200 in November 2001. The price of imported sugar and that of locally produced sugar are hardly different from each other.

As for refined sugar, its average dropped sharply from Rp 3,200 per kg to Rp 1,066 in the 4th quarter of 2001 as a result of dumping practices by the world's major sugar producers.

Consumption up again

In 1997, the domestic consumption of sugar rose to 3.28 million tons although the domestic production had not grown as rapidly. As a result, Indonesia imported sugar in considerable quantities in the same year. The sharp depreciation of the rupiah in 1998 and the high import duty on sugar caused the domestic consumption of sugar to drop by 25.1% to 2.46 million tons in the same year.

In view of the soaring price of sugar and of the short supply of the commodity on the domestic market, the Government lowered the import duty on sugar to 0% in 1999, causing domestic consumption to surge by 49.5% to 3.68 million tons in the same year. In 2000, the domestic consumption of sugar decreased slightly to 3.25 million tons. Over the past five years (1996-2000), domestic sugar consumption grew at an average annual rate of 3.9%.

Of the 3.25 million tons in domestic sugar consumption in 2000, some 20% or 650 thousand tons was consumed by food-processing industries (such as milk, beverage, and cake). These industries consume not only refined sugar but also white sugar, which meets the minimum quality requirements for use as a basic material by them.

Due to the sharp depreciation of the rupiah in 1998, the price of sugar on the domestic market soared while the supply dropped. As a result, the per capita consumption of sugar shrank by 25.1% from 16.8 kg in 1997 to 12.4 kg in 1998. In 1999, due to the government policy on exempting sugar from import duties, the per capita consumption of sugar rose to 18.3 kg.

Over the past five years (1996-2000), the per capita consumption of sugar grew at an average annual rate of 2.7%. Throughout the period, it averaged 16 kg/year. Compared to the world average of per capita sugar consumption, which is 20 kg/year, the per capita consumption of sugar in Indonesia is low.

Food-processing industry absorbs 810,000 tons

According to the Indonesian Sugar Council, the food-processing industry's annual demand for white sugar accounts for one-fourth of national domestic consumption. Given that the national consumption of sugar for 2,000 was around 3,251 thousand tons, the food-processing industry's white sugar consumption for the same year was about 810,000 tons. High-quality food products and drinks require an estimated two-thirds of the food-processing industry's total sugar consumption. Thus, the food-processing industry's demand for refined sugar can be put at 540,000 tons per annum.

Not until 1995 did the producers of white sugar in Indonesia start to produce products which met the quality requirements imposed by the food-processing industry, and they together have a combined capacity to produce 40,000 tons of such white sugar per annum. The food-processing industry usually refines such white sugar using its own sugar-refining facility before it actually uses it as a basic material for its products.

Thus, the food-processing industry's demand for refined sugar is supplied by white-sugar producers and by PT Bernas Madu Sari, which has a capacity to produce 150,000 tons of refined sugar per annum. In addition, the food-processing industry also imports refined sugar from, among others, Singapore and Dubai.

Of the different products of the food-processing industry, those which require the most white sugar include canned fruit (21.5% of the basic material composition), fruit essence/candied fruit (50%), snack food (30.7%), candy (30.7%), cake and biscuits (13%), ketchup and syrup (30%), and sweetened milk (40%). The higher the quality of the products, the higher the amount of refined sugar required. As an illustration, Santos (coffee mix), Van Melle (candy), and Nabisco (snack) use refined sugar produced by PT Bernas Madu Sari.

Industries which use high amounts of white sugar in their production processes are not necessarily among the largest consumers of sugar, depending on the volume of their output. The ketchup and syrup industries, for example, in which white sugar accounts for 30% of their total basic material composition, only consume 63,990 tons of such sugar annually (or 7.9% of the total national).

The ten largest buyers of refined sugar from PT BMS are as follows: Coca-Cola (5,000 tons per month), Frieschevlag (1,500 tons), Indomilk, Indolakto, and Santos (1,000 tons each), Asia Health (700 tons), Van Melle (500 tons), Nutrifood and Nabisco (400 tons each), and Agel Langgeng (300 tons).

If these ten regular customers of PT BMS consume refined sugar at the same monthly rate on a continuing basis for one year, they absorb 141,600 tons, which is close to PT BMS's installed production capacity (150,000 tons). This means that it is likely that tens of other brands of processed food products consume refined sugar which is not produced by PT BMS.

Global sugar consumption up 7.6%

In 2001, the world produced 130 million tons of sugar and consumed 128 million tons, with 33 million tons traded on the global market. The global consumption of sugar grows with the population. Over the period of 1995-2000, the global consumption of sugar rose by 7.6% from 118 million tons (in 1995) to 127 million tons (in 2000). The largest sugar importer in the world is Russia (3.6 million tons in 2000), followed by the United States (2 million tons), the European Union (1.8 million tons), Japan (1.6 million tons), South Korea (1.45 million tons), and Indonesia (1.3 million tons).

Prospects and conclusions

Deregulating sugar trading and leaving sugar pricing to the market mechanism are good and relevant. However, under the current market situation in which there is no supply and demand equilibrium, the market mechanism can send sugar producers (both millers and refiners) tumbling. Interventions from the Government are good as long as they are directed to improve the market and to remove distortions. In other words, the empowerment of the national sugar industry requires a political will from the Government. The Government has interests in the national sugar industry not only because of its role as regulator but also because it is a shareholder in most sugar companies in Indonesia. In addition, the Government also plays a role as protector of sugar-cane farmers.

Although the WTO allows Indonesia to raise the import duty on sugar to the maximum level of 110% in the case the import volume exceeds 148,000 tons, the Government needs to take the interests of consumers into consideration before deciding on a hike in such an import duty. If the import duty on sugar is too high, many people will not be able to buy it. On the other hand, sugar producers also need some protection in order to be able to compete with imported sugar. This requires some compromise, e.g. that the import duties on sugar be determined at 20% for raw sugar and 35% for white/refined sugar for the first years (up to 2003) and lowered to 10% and 25% for the subsequent years (2003-2010) and lowered further to the rates agreed upon by AFTA, APEC, and WTO.

The Government needs to make efforts to improve the condition of the national sugar industry, e.g. by providing soft loans for sugar-cane farmers and shifting the sugar-production base from Java to areas off-Java. Providing soft loans for sugar-cane farmers would help increase the productivity of cane plantation and, hence, revitalize the sugar industry while shifting the sugar-production base from Java to areas off-Java would help improve the efficiency of the sugar factories already existing in Java. The funds raised from applying a compromised import duty on sugar can be allocated for investment in the establishment of new sugar factories outside of Java and in improving the efficiency of sugar factories existing in Java.

Although the performance of the national sugar industry is still poor, the domestic consumption of sugar will increase in the next several years for some reasons, e.g. that the per capita consumption is still low. The domestic consumption of sugar is predicted to increase by more than 5% annually for the next several years. Over the same period, the domestic consumption of refined sugar is expected to grow more rapidly because of, among others, the increasingly tough competition among food producers, which force them to produce high-quality products with better taste consistency and better hygiene.
Table - 1
Types of Cane Sugar Processing

 Quality of Sugar Carbonating Sulfating Refining

Polarities (%) 99.70 - 99.80 99.70 - 99.80 99.95 - 99.98
Color, IU 110 - 288 135 - 370 27 - 49
Rough particles, grade 2 - 4 4 - 5 1 - 2
SO2 (ppm) 4 - 8 7 - 14 0.2 - 0.4
Ashes (%) 0.02 - 0.12 0.03 - 0.14 0.002 - 0.008

Source: Data Consult
Table - 2
Sugar factories: their number and processing capacities, 2000

(Tons/day)
Name of company Location of Number of Cane-
 Factory Factories Processing
 Capacity
State Enterprise
1. PTPN II North Sumatra 2 7,694
2. PTPN VII South Sumatra 2 12,000
3. PTPN IX Central Java 8 20,710
4. PTPN X East Java 11 34,251
5. PTPN XIII South Kalimantan 1 5,000
6. PTPN XIV Ujung Pandang 3 7,941
7. PTPN XI East Java 17 38,000
8. PTPN XIV West Java 8 16,772
Subtotal 52 142,368

Private

1. Trigunabina, PT Central Java 2 6,218
 and East Java
2. Candi, PT East Java 1 1,823
3. Rajawali NUsindo, PT Central Java 3 11,019
 and East Java
4. Madu Baru, PT Yogyakarta 1 3,011
5. Gunung Madu Plant., PT Lampung 1 9,500
6. Gula Putih Mataram, PT Lampung 1 8,260
7. Sweet Indo Lampung I, PT Lampung 1 10,000
8. Bapippundip, PT Central Java 1 2,716
9. Naga Manis, PT North Sulawesi 1 10,000
Subtotal 12 62,547
Total 64 204,915

Sources: Indonesian Sugar Council/Data Consult
Table - 3
Profile of Double Refined Sugar Producer

 Description Detail

Name of company PT Bernas Madu Sari
Location of plant Bojonegara, Serang, Banten
Status Domestic Investment
Date of establishment 7 September 1993
Production capacity 150.000 tons per year, expand able
 to 250,000 tons
Management Melvin Korompis

Source: Data Consult
Table - 4
Acreage of Sugar Cane Plantation in Indonesia,
1996 - 2000

Year Smallholders' State Private Total Growth
 Plantation Plantation Plantation (%)

1996 303,047 79,269 63,217 446,533 --
1997 218,201 85,086 83,591 386,878 -13.4
1998 183,302 85,858 56,555 325,715 -15.8
1999 177,000 82,000 83,000 358,000 9.9
2000 189,000 89,000 88,000 366,000 2.2
Average growth -4.3

Source: Directorate General of Plantation Estates/Data Consult
Table - 5
Indonesia's sugar output,
1996 - 2000

Year Production Growth
 (000'tons) (%)

1996 2,100.5 --
1997 2,196.5 4/6
1998 1.492,7 -32.0
1999 1.488,6 -0.3
2000 1.693,9 13.6
Average growth -3.5

Sources: Indonesian Sugar Council/Data Consult
Table - 6
Indonesia's Refined Sugar Output,
1997 - 2000

Year Output Growth
 (000 tons) (%)

1997 87.555 --
1998 73.494 -16,1
1999 148.740 102,4
2000 110.846 -25,5

Source: Data Consult
Table - 7
Productivity of Sugar Cane Plantation in Indonesia,
1996 - 2000

Year Acreage Productivity Sucrose Crystals
 Content

 (ha) (tons of (%) (tons/ha)
 canes/ha)

1996 446.533 70,9 7,32 5,19
1997 386.878 72,4 7,83 5,68
1998 325.715 71,8 5,49 3,95
1999 341.057 62,7 7,01 4,39
2000 342.920 70,0 7,04 4,93

Sources: Directorate General of Plantation
Estates/Indonesian Sugar Council/Data Consult
Table - 8
Sugar Factories: Their Number and
Processing Capacities, 2000

Processing Capacity Java Off Java Total
(tons of canes/day) (units) (units) (units)

<1,000 1 -- 1
1,000 - 2,000 22 -- 22
2,000 - 3,000 14 3 17
3,000 - 5,000 11 5 16
5,000 - 10,000 4 3 7
>10,000 -- 1 1
Total 52 12 64

Sources: Indonesian Sugar Council/Data Consult
Table - 9
New Projects in Sugar Industry Approved
by Investment Coordinating Board in 1999-August, 2001

 Name of Location Status Production
 company capacity
 (tons/year)

PT Ranji Karya Lima Puluh Kota, PMA Sugar cane
 Agro Wesr Sumatra 3,000,000
 Sugar 300,000
PT Jawa Manis Serang, Banten PMDN Sugar 150,000
 Rafinasi Molasses 30,000
PT Lampung South Lampung, PMDN Refine sugar
 Multi Manis Lampung 540,000
 Woven bags 9,504
PT Dharmapala Gresik, PMDN Sugar 250,00
 Usaka East Java Glocose 15,000
 Sukses

 Name of Invest- Date of Commence
 company ment Approval ment of
 (Rp'mill.) by BKPM Operations

PT Ranji Karya 325 *) 1999 Oct.'2003
 Agro

PT Jawa Manis 180,000 2000 Jan.'2004
 Rafinasi
PT Lampung 474,860 2001 Apr'2003
 Multi Manis
PT Dharmapala 64,500 2001 July'2004
 Usaha
 Sukses

*) in millions of U.S. dollars;

Sources: Indonesian council/Data Consult
Table - 10
Sugar import duties in several countries

 Country Raw Sugar White Sugar
 (%) (%)
Indonesia 20 25
Philippines 65 Import not allowed
South Korea 4 45
Vietnam Import not allowed Import not allowed
Malaysia 0% - only four refineries Import not allowed
 allowed to import

Brazil *) 20 35
Uni Eropa 240 --
Argentina 20 40
Peru 25 50

*) Brazil is one of the world's most competitive sugar producers
Sources: Indonesian Sugar Council/Data Consult
Table - 11
Developments in Floor Price of Sugar,
1995 - 1999

Year Floor Price Growth
 (Rp/100 kg) (%)

1995 91,080 --
1996 91,080 --
1997 96,080 5.5
1998 145,000 50.9
1999 250,000 72.4

Sources: Indonesian Sugar Council/Data Consult
Table - 12
Developments in Indonesia's Sugar Imports,
1995 - 2000

Year Volume Value
 (000'tons) (US$'000)

1995 543.3 245,351
1996 1,090.0 459,103
1997 1,084.2 394,161
1998 966.1 347,502
1999 2,187.1 528,659
2000 1,556.7 254,055

Source: CBS/Data Consult
Table - 13
Indonesia's 2000 Sugar Imports,
by Country of Origin

 Country of Volume Value
 origin (tons) (US$'000)

Thailand 887,152 151,975
Australia 52,083 8,936
China 80,520 13,657
Brazil 110,962 21,354
United Arab Emirates 134,725 24,449
England 66,892 15,342
United States 65,221 10,627
Other countries 159,145 7,715
Total 1,556,700 254,055

Source: CBS/Data Consult
Table - 14
Developments in Indonesia's Raw Sugar Imports,
1996 - 2000

Year Volume Value
 ('000 tons) (US$'000)

1996 685.3 288,387
1997 578.0 231,702
1998 121.3 36,513
1999 984.7 220,318
2000 549.2 109,435

Source: CBS/Data Consult
Table - 15
Average Retail Price of Sugar in Indonesia,
1997 - 2001

Year Price
 (Rp/kg)

1997 1,581
1998 3,575
1999
 - January 3,589
 - March 3,222
 - April 2,901
 - June 2,523
2000
 - May 3,679
2001
 - September 2,950
 - November 3,200

Source: Department of Industry and Trade/Data Consult
Table - 16
Comparison between Price of Locally Produced and
Internationally Produced Refined Sugar, 2001

 Locally Internationally
 Produced Produced

 Average Price (by PT on the on the
 BMS) internatio- domestic
 nal market market

 (Rp/Kg) (US$/Ton (Rp/Kg)
 -- C&F)

Average price for 1st quarter 3,333.33 265.87 3,947.49
 for 2nd quarter 3,600.00 271.07 4,237.78
 for 3rd quarter 3,200.00 267.77 3,766.03
 for 4th quarter 1,066.67 81.83 1,099.92
Average price on a monthly 2,800.00 221.63 3,169.98
 basis

Source: Data Consult
Table - 17
Domestic Sugar Consumption, 1996 - 2000


(000'tons)

Year Production Imports National Growth
 Consumption (%)

 1996 2,100.5 1,090.0 3,190.5 --
 1997 2,196.5 1,084.2 3,280.7 2.8
 1998 1,492.7 966.1 2,458.8 -25.1
 1999 1,488.6 2,187.1 3,675.7 49.5
 2000 1,693.9 1,556.7 3,250.5 -11.6
Average 3.9
 growth

Source: Data Consult
Table - 18
Per Capita Sugar Consumption in Indonesia,
1996 - 2000

 Domestic Per Capita
Year Consumption Population Consumption Growth
 (000'tons) (000 peoples) (kg) (%)

1996 3,191 193,000 16.5 --
1997 3,281 195,000 16.8 1.8
1998 2,459 198,000 12.4 -26.2
1999 3,676 200,700 18.3 47.6
2000 3,251 203,400 16.0 -12.6
Average growth 16.0 2.7

Source: Data Consult
Table - 19
Food-Processing Industries' Estimated Sugar
Consumption for 2000

 Share in
 Industry Consumption Total
 (tons) (%)

Snack food 213,030 26.3
Bread, biscuit, and noodles 191,970 23.7
Processed milk products 181,440 22.4
Candy 138,510 17.1
Ketchup and syrup 63,990 7.9
Chocolate and 21,060 2.6
canned fruit
Total 810,000 100.0

Source: Data Consult
Table - 20
PT Bernas Madu Sari's 10 Regular Customers
Food-Processing Industries' Estimated Sugar
Consumption for 2000

(Tons)

 Regular Monthly Estimated Annual
Name of Company/ Purchase Purchase
Product (tons) (tons)

Coca Cola 5,000 60,000
Indomilk 1,000 12,000
Frieschevlag 1,500 18,000
Indolakto 1,000 12,000
Santos 1,000 12,000
Asia Health 700 8,400
Van Melle 500 6,000
Nutrifood 400 4,800
Nabisco 400 4,800
Agel Langgeng 300 3,600
Total 141,600

Source: Data Consult
Table - 21
World's Largest Sugar Consumers, 2000

Country Consumption
 (in millions of tons)

India 16.25
European Union 15.12
Brazil 9.30
United States 9.14

Source: Data Consult
Table - 22
Projections of National Consumption of White
and Refined Sugar, 2001 - 2005

 Consumption Total

Year White Sugar Refined Sugar *) Consumption

2001 2,831 583 3,414
2001 2,955 630 3,585
2003 3,084 680 3,764
2004 3,317 748 4,065
2005 3,267 823 4,090

*) Consumption by food-processing industries
(exclusive of consumption by pharmaceutical industries)

Source: Data Consult

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Comment:Refined sugar has good market prospects amidst national sugar industry's sinking performance. (Industry Profile).
Publication:Indonesian Commercial Newsletter
Article Type:Statistical Data Included
Geographic Code:9INDO
Date:Dec 4, 2001
Words:6844
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