Description

Recently, PT Media Data Riset (Mediadata) is analyzing various industries. One of the analyses that have been ready is the study of prospect of sugar industry and it's marketing in Indonesia, 2007.

The problem of sugar industry in Indonesia is the gap between the low production capacity and the increasing needs. The instant solution by the government was to issue the policy of sugar import. As a result, the market is overflowed by imported sugar, and some are illegal. While the local sugar factories are difficult to increase their production and productivities, because the production machinery have worn out and the performance is relatively low. Meanwhile, many farmers are reluctant to grow sugar cane, because the price is very cheap. In fact, the needs of sugar cane for sugar factories in Indonesia are about 80% supplied by the farmers.

Actually, in 'Renstra' Agriculture Development 2004–2015, the government introduced the sugar self-supporting with the production phase in 2007 minimal 2,6 million tons. But according to the calculation of Department of Agriculture, that in the mill season of November 2007, the production of white crystal sugar in Indonesia can only reach 2,35 million tons, but this has exceeded the production in 2006 that was 2,3 million tons. While, the production of refined sugar up to the end of 2006 was only 1,1 million tons. Therefore, in 2007 the government has to import to fulfill the domestic needs of sugar of 4,67 million tons.

The interesting thing for business in Indonesia was that the domestic sugar demand is increasing, either for household consumption or raw materials for food, beverages, and pharmacy industries. The consumption of white crystal sugar is still in the first rank, but the demand of refine sugar recently show the increasing trend to exceed 1,2 million tons per year, especially the industrial sector demand. This means there is a new business opportunity in sugar field, either large scale or small scale.

In manufacturing sector, in 2007 the Department of Agriculture has recommended the erection of three new private sugar factories in East Java, West Sumatera, and West Kalimantan with total mill capacity of 15.000 – 18.500 TNC. Meanwhile, two other companies has asked for recommendation of the Department of Agriculture, and was being verified the license status. Beside that, the government will allocate fund of 10 trillion to revitalize the national sugar industry, where 4,5 trillion for sugar factory structure, and 5,5 trillion for the extension of sugar cane plantation area, and improving it's productivities. The double effects of this government policy are to increase new business field, either at the level of on-farm (upstream industry), off-farm (downstream industry), and other supporting business facilities.

Regarding the sugar price, it was indicated that the global sugar price is tend to decrease, even generally stabilized around US$ 305 per ton FOB. But according to the prediction of Indonesian sugar experts, this tendency is caused by the arrival of harvesting and milling season. Then the global sugar price is predicted to stabilize in the profitable level.

Problem that often occurs in national sugar industry is regarding the distribution. There is one distribution component (Importer trader, registered importer, and so on) that is so strong, which can influence the domestic sugar distribution and price. This group is indicated to conquer almost 70% of domestic sugar distribution.

The power of distribution caused this group of businessman can control the price, and the government has difficulty in controlling them. Some people said that the price increase was caused by the increase of international sugar price. But, it is hard to be accepted when the domestic supply of sugar is sufficient. Beside that, the domestic production price has no correlation with the international price, considering all the sugar production components came from within the coun