MUMBAI - Indonesia has asked the country's industry to give priority to sugar import from India, but at the same time would want New Delhi to lower the Customs duty on its palm oils, Indonesia Deputy Agriculture and Food Minister Musdhalifah Machmud said.

 

INTERVIEW: Indonesia Deputy Agriculture And Food Minister

 

"We have told our importers to give priority to sugar from India to boost bilateral trade," Machmud told Cogencis on the sidelines of Globoil 2019.

 

To accelerate sugar imports from India, Indonesia is planning to ease the quality norms for imported sugar, she said.

 

Indonesia usually imports sugar of over 1,200 ICUMSA or raw sugar for its refineries. ICUMSA is a unit for measuring whiteness and purity of sugar. Lower the ICUMSA, better the quality of sugar.

 

However, most of Indian raw sugar is also of better quality, creating a barrier for exports.  

 

Indian white refined sugar, considered the best the world over, has ICUMSA level of 45, low quality white sugar has ICUMSA level of 150-200, while raw sugar has ICUMSA level of 400-800. 

 

Indonesia is planning to allow import of Indian raw sugar with ICUMSA level of 600, following bilateral talks earlier this month.

 

The Southeast Asian country usually buys 3.5-4.0 mln tn sugar a year, most of which is sourced from Brazil and Thailand. In 2019 so far, Indonesia has imported 2.8 mln tn sugar, as against 3.2 mln tn in the year ago period, the minister said.

 

Indonesia's sugar imports are expected to be slightly lower this year because of higher carryover stocks in the country. "We have more than 1 mln tn of carryover stocks (of sugar) with us which is enough to meet our domestic consumption," the minister said.

 

Indonesia is also planning to increase import of buffalo meat from India, Machmud said. Indonesia is likely to import 80,000 tn buffalo meat from India in 2019, of which, around 44,000 tn has already reached the country, she said.

 

Last year, the Southeast Asian country had bought 50,000 tn buffalo meat from India.

 

PALM PUZZLE

 

In lieu of higher import of Indian sugar and buffalo meat, Indonesia would want India to increase its palm oil imports from the Southeast Asian country, Machmud said.

 

Indonesia's palm oil exports to India have taken a hit this year as demand had shifted to Malaysia. India's refined palm oil imports from Malaysia attracted 45% import duty this year under a preferential trade pact, compared with 50% duty on Indonesian oil.

 

Indonesia is the largest importer of palm oil the world.

 

India rectified this anomaly earlier this month by increasing the duty on refined palm oils from Malaysia to 50%.

 

India's palm oil imports from Indonesia were 12% lower on year in 2018 and further declined by around 20% in Jan-Aug, she said, adding that this would improve this month onwards with rationalisation of India's import duty on Malaysian oils.

 

"We appreciate India for raising duty on palm oil imports from Malaysia, but we would appreciate it more if India reduces duties from both countries to boost our exports," she said.

 

Despite lower demand from India, Indonesia's palm oil exports are seen higher this year, as demand has increased from China and African countries, Machmud said.

 

During Jan-Jul, Indonesia's palm oil exports increased 4.7% on year due to a rise in exports to China by 47%, to African countries by 20% and to Japan by about 26%, she said.

 

Indonesia's total palm oil exports are seen at 34.6 mln tn in 2019, almost at last year's level, but production is seen increasing to 50-51 mln tn from 47.6 mln in 2018 due to an increase in acreage, the minister said.

 

Oil palm plantation is estimated to rise to 14.7 mln ha in 2019 from 14.3 mln ha last year.

 

With domestic palm oil supplies seen rising due to a larger crop and high carryover stocks, Indonesia has stepped up its bio-diesel programme, which should absorb about 6 mln tn of crude palm oil this year, Machmud said.