Indonesia Weighs Steps to Cool Stubbornly High Sugar Prices
Indonesia Weighs Steps to Cool Stubbornly High Sugar Prices
(Bloomberg) -- Indonesia is weighing steps to tackle high sugar prices during the nation’s peak demand season as the coronavirus outbreak delays imports and worsens a supply shortage.
The government is diverting the sweetener meant for industries to the retail market to meet household demand, Coordinating Minister for Economic Affairs Airlangga Hartarto said in Jakarta on Wednesday. Some shipments of sugar from overseas have been delayed because of lockdowns in some supplier countries, he said.
Concerned over the stubbornly high sugar prices, President Joko Widodo on Wednesday ordered his cabinet to take steps to boost the availability of the commodity that’s retailing at almost 40% above the government’s reference price. High prices are hurting consumers, whose purchasing power has already been weakened by massive job losses and partial lockdowns sparked by the pandemic, Widodo said.
The shortage has prompted Indonesian mills to ask consumers to reduce sugar usage after retail prices rallied to the highest in almost four years. The country has faced hurdles in accelerating sugar imports because of a lower crop in Thailand and a nationwide lockdown in India, both of which are among the world’s top producers.
Indonesia’s sugar imports may rise to 4.65 million tons in the year that starts in May, from 4.03 million tons a year earlier, according to the U.S. Department of Agriculture. Demand in the world’s largest Muslim-majority country typically peaks during the fasting month of Ramadan.
The government is planning to use military planes to improve the supply of shallots, an essential ingredient for Indonesian cuisine, as retail prices hover almost 60% above the official reference rate, Agriculture Minister Syahrul Yasin Limpo said. While the country has ample supplies of the vegetable, social distancing rules have hampered transport and distribution across the archipelago, he said.
Jokowi, as the president is known, said it’s important to keep staple food prices under check and improve supplies given the Food and Agriculture Organization’s warning of a food crisis amid the pandemic and as the deflationary trend in the economy signals weakening consumer purchasing power.
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