The Sindanglaut sugar factory in Cirebon regency, West Java, appears quiet on Tuesday (24/10) after the grinding process. Local sugarcane farmers have complained about the slow absorption of their sugar. Of 17 auctions, the farmers’ sugar was sold only at auctions 1 through 10.
SEMARANG, KOMPAS — The sugar trade is messy. Farmers have decided to unilaterally cancel the sales agreement with the State Logistics Agency (Bulog) because the contract was seen as not beneficial. They consider the government, Bulog in this case, is not serious and has ignored the efforts of sugarcane farmers who have worked hard to maintain domestic sugar production.
Such anxiety was voiced by both the farmers and the Indonesian Sugarcane Farmers Association (APTRI). In Central Java, farmers canceled the contract with Bulog, which was committed to buying 800 tons of sugar. The farmers regarded the price, set at Rp 9,700 per kilogram,as not competitive. They chose to sell the sugar directly to the market at a higher price.
Chairman of the APTRI in Kudus Raya, Central Java, Harjo, 50, said Tuesday (Oct. 24) the farmers had withdrawn 50 tons of sugar that was initially planned to be sold to Bulog. “We cannot ban the sugarcane farmers from withdrawing the sugar. They need money to finance the operational costs for the next milling season,” he said.
By selling their sugar at the market, the farmers get two benefits. Firstly, the sale of sugar to a third party, not to Bulog, is not subject to valued added tax. Secondly, the farmers get money after six months of uncertain contracts with Bulog.
Central Java APTRI chairman Sukadi Wibisono said such action was taken not simply because the farmers wanted to make a profit, but because Bulog was not ready with fresh funds.
Ironically, when Bulog agreed to buy farmers’ sugar at Rp 9,700 per kg, big traders offered a bid to Bulog. When the sugar was still in the farmers’ hands, no big traders showed interest due to the 10 percent valued added tax.
Killing business
Sukadi said it was a bad precedent for the sugar industry in the country. The government was seen as not serious and ignored the farmers, who have worked hard.
APTRI secretary general Nur Khabsyin made a stronger comment. He said some rules in sugar management, such as the tax and selling price, are potentially killing the farmers’ business. The minimum incentive for farmers is counterproductive to the self-sufficiency effort.
He mentioned the rule for farmers to sell sugar to Bulog at Rp 9,700 per kg as an example. Beside the selling price, which is lower than the production cost of Rp 10,600 per kg, the rule gives the farmers no chance to get a higher price in the market.
Income tax also puts pressure on the farmers. Khabsyin said even though there is no 10 percent VAT, the farmers still bear the burden of the 1.5 percent income tax for those with a taxpayer identification number (NPWP) and 3 percent for those without a NPWP.
A similar complaint was expressed during the national talk at Jakarta International Expo Kemayoran in Central Jakarta on Monday (Oct. 23). Sugar farmers demanded that the government revoke the Trade Minister’s letter and Trade Ministry domestic trade director general’s letter.
Nur Khabsyn said the stipulation that restricts farmers to sell sugar only to Bulog is disadvantageous. Bulog takes too high a profit by buying sugar from farmers at Rp 9,700 per kg.
Bulog eventually sells the sugar to big traders for Rp 11,000 per kg. This is harmful to the farmers because they lose Rp 1,300 per kg.
A similar stance was shown by sugar farmers in East Java. PTPN XI Indonesian Sugarcane Farmers Association chairman Sunardi Edi Sukamto said sugarcane farmers in East Java had agreed not to sell sugar to Bulog. Because, when it was checked, the quality of some sugar was below the Indonesia National Standard (SNI).
“No sugar from farmers sold to Bulog. If there is one farmer who can sell sugar to Bulog but others cannot, it would create envy. Issues related to the SNI are handled by PT Perkebunan Nusantara, not the farmers,” he said.
Bulog president director Djarot Kusumayakti, during a food talk at Bogor Institute of Agriculture, on Friday (Oct. 20) said there was surplus sugar stock in the market. With an average sugar consumption of 240,000 tons per month, the sugar stock by the end of the year is estimated to reach 1.2 million tons.
Such conditions could put pressure on the sugar price because the sugar stock is located in different places. Therefore, the government tried to control the sale so that the sugar price would not drop in the next harvest season through, among other things, regulating the sale of low-grade sugar to only Bulog and its partners.
Regarding the imposition of income tax, Djarot said, that is the remit of the finance ministry.
