Indonesia plans to develop the sugar industry in Papua.

Indonesia, the world's largest importer of sugar, plans to increase the planting of sugarcane in its eastern region of Papua with the aim of reducing imports and developing the sugar industry, including the production of bioethanol, the cabinet minister stated on Monday.

Plans to increase sugar production

The plans were announced amid rising domestic sugar prices due to tight stocks as last year's dry spell caused by the El Niño weather phenomenon damaged crops. The Indonesian government in 2022 set a goal of becoming self-sufficient in sugar by 2027. In order to achieve this, plantations need to be significantly expanded. The government has set aside 2 million hectares (4.9 million acres) of land in Merauke, South Papua province, for an industrial zone to plant sugarcane, mills, a bioethanol plant and a biomass plant, Investment Minister Balkhil Lahadalia told reporters.

Internal price of sugar

“At the first stage, two million seedlings from Australia will arrive in the planting area,” said Balkhil, adding that the project will be led by domestic companies, including state-owned firms. Details about the timeline for developing the industrial zone were not provided.

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It is unclear whether the plans include any deforestation.

Currently, the average domestic price of sugar has increased by 24 percent compared to the previous year, reaching 18,344 rupees ($1.13) per kilogram due to a reduction in supply, as reported by government data on Monday due to poor production.
The country's sugar mill association expects that the grinding season will be postponed by a month until the end of May this year.
"The dry spell caused by El Niño damaged (sugarcane), some had to be planted again. .... Sugarcane is not ripe yet, the start of the milling season will be late," said I Purnomo Putranto, executive secretary of the Indonesian Sugar Mills Association.

Reduction of sugar imports

Additionally, there was a 14.4 percent reduction in sugar imports last year, down to 5.25 million tons, as global prices reached multi-year highs, leading to low stocks at the beginning of 2024. ($1 = 16,250 rupees).