Indonesia aims to cut sugar imports, develop sugar-based industry in Papua region

Jakarta: Indonesia, which imports the most sugar globally, wants to grow more sugarcane in Papua, aiming to reduce imports and develop a sugar-based industry, including making bioethanol, a cabinet minister said on Monday.

This plan comes as domestic sugar prices rise due to a shortage caused by last year’s drought linked to the El Nino weather pattern. In 2022, Indonesia set a goal to produce enough sugar for itself by 2027. To achieve this, it needs to expand its sugarcane farms significantly.

The government has chosen 2 million hectares (about 4.9 million acres) of land in Merauke, South Papua province, for an industrial area dedicated to sugarcane farming, sugar mills, a bioethanol facility, and a biomass power plant, according to Investment Minister Bahlil Lahadalia. He mentioned that for the initial phase, two million seedlings will be brought from Australia, and local companies, including state-owned ones, will lead the project.

However, there are no specifics on when this industrial area will be developed, and it’s unclear if it will involve clearing forests.

Currently, the average domestic sugar price has increased by 24% compared to last year, reaching 18,344 rupiah ($1.13) per kilogram due to limited supply, as per government data released on Monday. The sugar mills association of the country predicts that the milling season will start a month late this year, ending in May, because last year’s El Nino-caused drought damaged sugarcane crops, leading to replanting.

Moreover, last year’s sugar imports dropped by 14.4% to 5.25 million metric tons, contributing to low stocks at the beginning of 2024, as global prices reached multi-year highs.


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