By Naila Firdausi
Aug. 11 (Bloomberg) -- Indonesia may cap prices sugar mills charge retail stores at 6,500 rupiah (65 U.S. cents) a kilogram to keep the commodity affordable to consumers, a minister said.
Current retail prices of about 8,500 rupiah per kilogram are higher than the government’s target price of about 7,500 rupiah a kilogram, Trade Minister Mari Pangestu said. Ex-factory prices are at 7,000 rupiah a kilogram, she said.
“We’re trying to make sure ceiling prices from producers can be lowered” to reduce retail prices, Pangestu said in an interview in Jakarta. “It’s a directive because the mills are state enterprises. They make a lot of profit as the cost of production is about 5,000 rupiah a kilogram.”
Indonesia’s local sugar prices are rising as mills factor in higher global prices in selling their products.
White sugar rose to a record in London yesterday as India, the world’s biggest user and second-largest producer, cut its forecast for monsoon rains, widening a global supply shortfall. Raw sugar has surged 86 percent this year in New York, touching 22.44 cents a pound yesterday, the highest since March 1981.
Indonesian households buy sugar made from canes harvested by the country’s farmers, while industrial users import refined sugar or buy from domestic processors of raw sugar bought abroad.
To contact the reporter on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net.
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