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22.09.2008

Indonesia plans to limit types of sugar imports

JAKARTA, Sept 22 (Reuters) - Indonesia plans to limit the types of high-quality refined sugar that can be imported in a bid to prevent a glut in the market, its trade minister said on Monday.

An expected bumper white sugar crop this year, along with plentiful imports of high-quality white sugar and raw sugar last year, has caused a glut in the domestic market, raising concerns it will depress prices and affect farmers' profits.

Bigger food and drinks firms use sugar that is either imported in refined form, or bought from local sugar refiners, which import the sweetener in its raw state and then refine it.

Food and drink producers as well the pharmacy sector may only import refined sugar of maximum 25-ICUMSA grade compared with a maximum 45-ICUMSA grade previously, Mari Pangestu said.

"They can only import types of refined sugar which are not yet produced by local sugar refiners," Mari Pangestu said.

ICUMSA measures the colour of sugar. The lower the ICUMSA, the higher the degree of whiteness.

The government will also ask cane sugar mills which cannot produce good-quality white sugar or white sugar of below 200-ICUMSA grade to produce raw sugar cane which later can be processed by local sugar refiners, Pangestu said.

This is expected to reduce imports of raw sugar by local sugar refiners, she added.

The government has said it intends to cancel plans to import 500,000 tonnes of raw and white sugar used by the local industry this year due to adequate stocks.

Indonesia is expected to produce 2.9 million tonnes of white sugar in 2008, up 11.5 percent from last year's 2.6 million tonnes, the agriculture ministry said.

The Indonesian Sugar Council estimates domestic sugar stocks, including production from local cane plantations and imports of other types of sugar, will reach 6.2 million tonnes this year, exceeding consumption of 4.9 million tonnes.

Although Indonesia's imports do not form a large part of world sugar trade, they have contributed to a tighter global market.

Indonesia consumed 4.19 million tonnes of sugar in 2006, or less than 3 percent of global sugar consumption of 151.72 million tonnes, data showed.

REUTERS