Jakarta: The Indonesian Food and Beverage Producers Association (Gapmmi) announced that the domestic food and beverage industry is contemplating a price increase for several products this year due to the elevated cost of refined sugar, according to asianews.network.
The potential hike is expected to impact items like syrups, sodas, and cookies. Data from Markets Insider indicated that the global market price of refined sugar reached approximately 0.53 US cents per kilogram on Monday, reflecting a surge of over 26 percent compared to the same period last year.
Adhi S. Lukman, the chairman of Gapmmi, explained that the rise in sugar prices had escalated by about 30 percent on a year-on-year basis. He noted that the cost of imported sugar had now exceeded that of local sugar, leading him to foresee potential price adjustments by many firms by the end of this year or the beginning of the next.
Adhi highlighted the dependence of Indonesian processed food manufacturers on imported sugar, as local white crystal sugar, typically used for household consumption, was unsuitable for industrial production.
The spike in global sugar prices was influenced by El Niño-related droughts in sugar-exporting nations such as Thailand and India.
Despite this, Adhi emphasized that immediate sugar supplies wouldn’t be significantly disrupted, given that major companies usually purchased sugar at fixed prices through annual contracts that remained valid until the year’s end, providing a buffer against the high prices for a certain period.
He outlined that any adjustments in the prices of sugary products within the food and beverage industry would involve thorough consideration and discussions with distributors and retailers. Adhi projected that the average consumer price increase might range from 3 to 4 percent, an amount he believed fell short of covering the challenges faced by industry players.
Adhi reasoned that implementing a full consumer price increase to compensate for the rise in industrial sugar costs would be unfeasible due to Indonesian consumers’ sensitivity to pricing.
For instance, in the syrup industry, where refined sugar constituted around 60 percent of the raw materials used, Adhi indicated that producers could potentially raise retail prices by roughly 18 percent without driving consumers away.
The government approved an increase in the raw sugar import quota for refineries to 3.6 million tonnes in the 2023-2024 period, reflecting a 7 percent rise from the 3.36 million tonnes authorized in 2022-2023.
Despite a predicted growth in domestic plantation white sugar production, the government also granted sugar mills permission to import a total of 991,000 tonnes of raw sugar to utilize unused capacity.
Projections from the United States Department of Agriculture indicated that Indonesia’s sugar consumption for the 2023-2024 period was anticipated to be around 7.9 million tonnes of raw sugar equivalent, a slight increase from the 7.8 million tonnes consumed in the preceding year.
