White sugar production in Indonesia, Southeast Asia's largest sugar consumer, will climb by 16 percent this year on drier weather, with planting rising by 3.5 percent, the Indonesian Sugar Association (AGI) said on Monday. Indonesia produced about 2.25 million tonnes in 2010 after heavy rains hit crops, leading to government permits for 450,000 tonnes of imports, but this year output is seen jumping to about 2.6 million tonnes, Farukh Bakrie, chairman of AGI told Reuters.
Domestic output is only used for household demand and home-based industry. The AGI sees white sugar demand steady at around 2.7 million tonnes this year - a level that would reduce the need for imports but not remove them. The association's output forecast is in line with the Agriculture Ministry, which has revised down white sugar production for this year by 31 percent to 2.69 million tonnes from an initial forecast of 3.88 million tonnes.
Prolonged rains in Java island, which supplies 60 percent of Indonesia's sugar output, delayed the domestic crushing season from May to June last year, and reduced the sugar content in cane, resulting in lower production. Bakrie said new planting was estimated to increase by 15,000 hectares to 440,000 hectares this year.
Investors such as Wilmar and the Rajawali Group are aiming to grow sugarcane in the government's planned food estate in easternmost province Papua, as they expect a continued shortfall in Indonesia's sugar supply. Bakrie said there is an urgent need to overhaul the Indonesian sugar industry, currently split between numerous government departments, to make it more coherent and to boost production. Bakrie added that AGI was lobbying to streamline and strengthen government body the Indonesian Sugar Council (DGI), which would then report to the president and be responsible for all sugar policies.
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