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Indonesia food industry sees sugar use growing 10%

September 17, 2012

JAKARTA: Raw sugar consumption in Indonesia’s food and beverage industries will climb by 10% annually for the next five years, an industry group said today, as the country’s booming population boosts domestic demand.

This year, industry’s sugar use in Southeast Asia’s largest consumer of the sweetener will be 2.5 million tonnes, up 19% from 2011, Adhi Lukman, chairman of the Indonesian Food and Beverage Industries Association (GAPMMI), told Reuters.

“The food industry is growing, with beverage growth higher than food,” said Lukman. “Companies are happy with the Indonesian domestic market because it is quite big for the Asean region, with 240 million people.”

Overall consumption in the country with the world’s largest Muslim population will rise 4% to 5.2  million tonnes this year, with household and direct usage at 2.7 million tonnes, Lukman added.

Domestic sugar output will be flat at 2.2 million tonnes this year, meeting just half the country’s needs, with the shortfall likely to be filled by imports from Thailand, Brazil or Australia, he said.

“The government predicts 2.2 million tonnes. They see in the fields that some sugarcane is not growing well because the weather is too dry,” he said, referring to the domestic sugar harvest, which usually runs from May until October.

Dry weather in Indonesia has already prompted cuts this month in forecasts of annual production made by rubber, cocoa and rice groups.

Cheaper to import

Indonesia was once the world’s second-largest exporter of sugar in the 1930s, but ageing mills, a vast network of smallholders and an influx of cheaper imported sugar have squeezed domestic production.

Lukman urged the government to open up more land for sugar plantations and improve infrastructure because it is currently cheaper for the industry to import raw sugar.

The country’s sugarcane farmers protested in December against plans to import sugar this year.

Indonesia limits imports of raw sugar to protect local farmers and aid domestic sugarcane mills. Raw sugar import quotas for 2.35 million tonnes had been issued for the year so far, Lukman said.

There are eight sugar mills in the archipelago, with two more due to open this year, added Lukman, who is also a director of PT Niramas Utama, a company well-known for its jelly sweets and puddings.

Established in 1976, GAPMMI has about 300 members, including Indofood Sukses Makmur, Nestle and Unilever, and acts as a go-between for industry and government.

- Reuters


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