Danantara’s Significant Intervention to Aid Sugar Farmers
In a crucial move to stabilize the domestic sugar market and provide much-needed relief to local farmers, the national investment management authority, Danantara Indonesia, has committed a substantial Rp1.5 trillion (equivalent to approximately US$92 million) to purchase unsold sugar. This significant financial pledge was made following a series of discussions with the Association of Indonesian Sugarcane Growers (APTRI) to address a growing problem of surplus stock. According to an APTRI official, the promised funds will be strategically disbursed through PT Sinergi Gula Nusantara, a subsidiary that will act as the purchasing agent. This intervention is designed to inject liquidity into the market and ensure that farmers receive fair compensation for their hard-earned produce, thereby preventing a potential crisis in the agricultural sector. The proactive measure aims to restore stability and confidence in the sugar supply chain, securing the livelihoods of countless farmers across the nation.
Unsold Stock and Market Price Decline Explained
The need for a large-scale purchase became apparent after a major accumulation of thousands of tons of sugar went unsold for weeks at the Assembagoes factory in Situbondo, East Java. This backlog was a direct result of market pressures, as local merchants were consistently offering prices well below the official government reference price of Rp14,500 per kilogram. The factory’s general manager noted that this inability to move the stock created a domino effect, preventing the factory from fulfilling its financial obligations and paying the farmers whose sugarcane had already been harvested and processed. This financial hardship has placed an immense burden on the nation’s sugarcane growers, many of whom rely on these payments for their livelihoods, and has created a ripple effect of uncertainty throughout the entire supply chain, from the farms to the factories.
The Threat of Industrial Sugar to the Retail Market
The primary cause of the decline in market price is widely suspected to be the unauthorized influx of cheaper, refined sugar intended for industrial purposes. This industrial-grade sugar is meant to be used by food and beverage manufacturers, but it has been making its way into the retail markets, creating unfair competition. A representative from the APTRI suggested that this cheaper, and often less sweet, sugar has a detrimental effect on both the demand for and the price of ordinary consumption sugar, which is produced by local farmers. This market distortion has created severe financial difficulties for the nation’s sugarcane growers, highlighting the urgent need for stricter market oversight and enforcement to protect the domestic agricultural sector from unfair competition. This is an ongoing problem that must be addressed to ensure the long-term sustainability of the country’s sugar industry.
