Tuesday, 15 January 2013


Downturn of sugar price in the past month generated anxiety among sugarcane growers and sugar mills. Although tender price was still above farmers’ price set by the Government at Rp 8.100/kg, extremely speedy downturn of price would confuse growers. The same condition was experienced by sugarcane traders who had bought from farmers at high price.

Adig Suwandi, General Manager Marketing PPN XI in their e-mail to Business News said signals of price downturn was visible from tender of 9.017 tons of sugar belonging to company-nurtured farmers of PT Perkebunan Nusantara (PTPN) XI in Surabaya last week which was in range of Rp 9.125 – Rp 9.127 kg/kg. The sugar was produced by 15 sugar mills exclusive of PG Semboro, the price being Rp9.605/kg.

The condition was way different from the same tender run by farmers early September last priced at Rp 9.826 – Rp9.837/kg Sugar produced by PG Semboro was Rp 10.400/kg in the tender of 30 August price was formed to reach Rp 10.260 – Rp 10.415/kg and Rp 10.652/kg  (PG Semboro).

Moreover price of sugar on August 14 which reached Rp 10.500 – Rp 10.652/kg  [PG Semboro] The highest tender price of sugar though milling season of 2012 was in tender on 13/7 Rp 11.670 and Rp 11.680/kg [PG Semboro].

Sugar produced by PG Semboro sugar mill in Jember was as premium quality because the processing was based on remelt carbonation scheme which result products comparable to semirafinated sugar – some of which were packaged under the Gupalas brand.

The cause of price downturn of sugar during post Lebaran days was among others stimulated by lessened demand. Market saturation was seen in the vast amount of sugar bought by traders but still stored at the factory warehouse.

Furthermore also due to word’s price of sugar for delivery in December 2012, which served as price reference for traders during transaction, settled in the range of USD 560 million/ton FOB [price of country of origin, exclusive of shipping and premium].

It was only reasonable that – as global sugar price was so low – growers and sugar mills were expecting the Government’s assurance there would be no infiltration of rafinated sugar because such kind of sugar was only for food & beverages industry but treated as consumed sugar.

Other reason was fear that the Government might suddenly release import permit for sugar for certain regions, but now that stock was more than sufficient, import of sugar was not a pressing necessity and not needed.

Favorable sugar price was needed to motivate farmers. By such expectation, farmers could experiment with new varieties and implement best agricultural practices or even land expansion.

“Farmers’ commitment to increase productivity was important in realizing national sugar self-sufficiency which was proclaimed by the Government as integral part of the nation’s self sufficiency.”

Business News - September 28, 2012

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