Government Intervention
The Indonesian sugar industry is inefficient and suffers from high farming costs and poor milling management. It is kept afloat by a mixture of direct and indirect government subsidies.
The country relies heavily on imports to meet demand, but the government is trying to boost domestic production and efficiency through a subsidized credit program for sugar farmers.
Indonesia also aids its growers by setting a minimum domestic sugar price that is 100% higher than the world dump market sugar price.
Along with floor prices, the principal form of support to the industry is through import licenses. These government-issued licenses strictly regulate the flow of foreign sugar into the country and help maintain high internal sugar prices.
Indonesia also enjoys a WTO-allowed import tariff of up to 95%.
Production and Price
Indonesia produces 1.86 million metric tons of sugar a year, not nearly enough to meet demand. It imports roughly 1.8 million tons a year.
Average domestic wholesale sugar prices from 2001-04 were 20 cents per pound, or double dump market levels of less than 10 cents per pound.
Trade with America
Like the United States, Indonesia is a net importer of sugar. The country does not export any sugar.
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