BITTER POLICY FOR SWEET SUGAR: An Essay on Active Resistances by Sugar Farmers on the Policy of Importing Sugar

BITTER POLICY FOR SWEET SUGAR

An Essay on

Active Resistances by Sugar Farmers on the Policy of Importing Sugar

(Picture retrieved from www.cnnindonesia.com)

Prepared by:

DIyah Perwitosari

21700068 

MPP811_ Organizations, Leadership and Ethics in Public Policy

School of Government and Public Policy

October

2017

BACKGROUND

A change will result to another change. A couple of examples that I can provide to support this statement are the emergence of Saminism against policy made by Dutch government and the emergence of social banditry by farmers to express their resistance against economic policy by Dutch government (Perwitosari, 2012a). These 2 (two) examples show how policy causes resistances in the form of social movements.

Analyzing change means we are analyzing a process from one condition to another condition, from one time to another time. There is a historical aspect needs to be presented (Perwitosari, 2012b). Based on this argument, this essay tries to present events in chronological order.

The goal of this essay is to analyze the resistance to change happened in Indonesia related to the public policy issued with specific objectives as follow:

1.       To present example(s) of resistance to change

2.       To analyze the type of the resistance

3.       To present the reasons of resistance or the arguments supporting the resistance

4.       To present the management of the resistance

5.       To present the outcome of the management

In the preparation of this essay, I started by gathering news related to resistances happened in the last couple of years. The resistances with chronological events that I found were resistances expressed by sugar farmers and/or sugar farmers through Dewan Pembina Nasional Andalan Petani Tebu Rakyat Indonesia (DPN APTRI) or National Council of Mainstay Sugar cane Farmers of People of Indonesia.

JANUARY 2016

An active resistance by the National Council of Mainstay Sugar cane Farmers of People of Indonesia (DPN APTRI) was done in January 2017 by being critical to the government’s plan to import 200,000 tons of white crystal sugar (GKP) in 2016 and by arguing and at the same time by using facts selectively to support their resistance.

Basically, there is lack of conviction that change is needed. According to Berita Satu online news, DPN APTRI rejected the government's plan to import 200,000 tons of white crystal sugar (GKP) in 2016. The refusal is based on the current national sugar stock. According to APTRI monitoring results, national sugar stock is 1 million tons at the beginning of 2016 and is enough for the next 5 months.  

DPN APTRI is also appealing to fear as they fear that this policy will further aggravate the national sugar trading system as seepage of refined sugar in the consumption market still occurs and there’s entry of illegal sugar from the borderlines. Thus, DPN APTRI thinks that the government should prioritize supervision problem in consumer market so that the national sugar trading system is healthier. APTRI assesses that the import policy will certainly reduce the passion of sugar cane farmers to increase productivity.

They also fear the impact of the government policy that encourages the use of refined sugar for small and medium industries (IKM) through distributors learning from the previous change. The policy is detrimental to farmers. The policy is feared to be the source of refined sugar leaks to the consumption market in larger quantities. This has occurred at the time of the enactment of the Letter of the Minister of Trade No. 111/2009 on the distribution of refined sugar for IKM through distributors which have been revoked by the issuance of Letter of the Minister of Trade No. 13000 / M-DAG / SD / 12/2014 dated December 18, 2014, distribution of refined sugar crystals.

Chart 1. Active Resistance by DPN APTRI in January 2016

MAY 2016

CNN Indonesia broadcasted an active resistance by National Council of Mainstay Sugar cane Farmers of People of Indonesia (DPN APTRI) was done in May 2016 against the plan of Ministry of State-Owned Enterprises (Kementerian Badan Usaha Milik Negara) to import 381,000 tons of raw sugar by sending a rejection letter (surat penolakan). In the letter, there are 7 (seven) statements expressing their views on the policy.

In its letter, DPN APTRI basically supports the guarantee on the sugar level of 8.5% yet without importing raw sugar (statement no. 6). DPN APTRI is not convinced that the import is needed by using facts selectively. The facts given were:

1.       The Sugar Balance (Neraca Gula) year 2016 has not been set thus the sufficiency of stock of sugar is not yet known (statement no. 1).

2.       The root cause of low sugar level is because the sugar factories are not efficient. It is based on the sugar level above 8.5% produced by efficient factories. Hence, the policy to import raw sugar as a compensation to enable PTPN (PT Perkebunan Nusantara / National Plantation Incorporated Company) and PT. RNI (Rajawali Nusantara Indonesia Incorporated Company) in ensuring the sugar level in sugar cane of at least 8.5% is an infant policy and is not educating (statement no. 3).

In addition to that, DPN APTRI fears that

1.       The plan to import 381,000 tons of sugar may exceed the national demand of sugar and may lead to the decrease on the price of sugar. In addition to that, there were 200,000 of imported PPI (Perusahaan Perdagangan Indonesia / Indonesian Trade Company) sugar (statement no. 2).

2.       The basis of the policy to import raw sugar for idle capacity should be in the sense that the production is less than the national demand, and that sugar factories is lacking in supplies. The anticipated event resulting out of this is that farmers will leave the inefficient factories, thus factories are lacking in supplies. It would be better if inefficient sugar companies be revitalized instead of milling raw sugar (statement no. 4).

3.       Profits out of processing raw sugar gained by inefficient sugar factories will be spent much on guaranteeing the sugar level to the farmers. Thus, there’s no chance of allocating the profits to revitalize the factories (statement no. 5).

Learning the reason no. 1 of what they fear, it can be said that their resistance against to the government’s plan to import 200,000 tons of white crystal sugar (GKP) expressed in January 2016 was not addressed by the government. 

While on the final statement, DPN APTRI presented the experience with the previous change where importing raw sugar was done by both State-Owned Enterprise and private factories yet it did not give positive impacts to the improvement of performance of sugar factories (statement no. 7).

Chart 2. Active Resistance by DPN APTRI in May 2016

REJECTING TO ACCEPTING IN ABOUT 2 (TWO) WEEKS

The resistance expressed in May 2016 seemed to be a bit different to what APTRI felt about the government’s plan to import 381,000 tons of raw sugar in June 2016. Safaat (2016) wrote that APTRI understands BUMN’s plan to import raw sugar because APTRI believes that the amount is still proportional to overcome the ‘idle capacity’ of people-sugar cane based factories. Anwar, Secretary General of APTRI, also regretted the statement of members of Commission VI of the House of Representatives Rieke Diah Pitaloka in RDP with the Minister of Trade who requested that the government postpone the granting of import permits 381,000 tons raw sugar to SOEs Sugar (BUMN Sugar) because the reason for importing is not clear.

However, Anwar further stated that raw sugar imports should be done if the supply of sugar cane is reduced. In the future, the desired achievement is the independence of sugar factory with raw material of sugar cane planted in Indonesia.

Meanwhile, Abdul Wachid, a member of Commission VI of the House of Representatives, who is also Vice Chairman of Gula Panja, said that the current national sugar production ranged from 2.4 to 2.5 million tons, while national consumption, assuming 12 kg/capita/year, reached 3 million tons. Another argument supporting Wachid was expressed by members of Commission VI of the House of Representatives, Ario Bimo and Bambang Haryo, who stated that it’s the right step to maintain the balance of the national food supply, in this case sugar and further argued that it’s the government duty to maintain the stability of the national food.

However, almost similar to APTRI’s opinion on sugar supply, Bambang Haryo thinks that the raw sugar import program must be accompanied by efforts to seriously self-sufficiency sugar. Thus, the nation will not be dependent on imported sugar.

Analysis

This difference of statement of APTRI compared to their statement in May 2016 may be due to the information shared by Wachid who gave the fact of the need of 3 million tons of sugar per year while the (annual) local production ranges from 2.4 to 2.5 million tons. There is a gap in demand ranging from 500,000 – 600,000 tons. Thus, it is understood should APTRI think that importing 381,000 tons of raw sugar in June 2016 is proportional amount. In other words, the data from Wachid has diminished lack of conviction from APTRI that importing 380,000 tons of raw sugar is needed. 

In my opinion, this is the right strategy to manage use-facts-based resistance by using facts and it is proven to be effective in gaining acceptance.

JULY 2017

According to a report, edited by Hasanudin Aco, in tribunnews.com (July 2017), APTRI conducted the National Working Meeting of APTRI themed Government’s Favor towards the Welfare of Sugar Cane Farmers. The meeting was attended by a number of officials; Head Trade Study and Development Agency of the Ministry of Trade, Director General of Plantation of Ministry of Agriculture, Head of Sub Directorate of Sugar Cane and Other Sweetener of Ministry of Agriculture, board member of Chamber of Commerce and Industry, directorate officials, and other related parties. During this event, APTRI highlighted a couple of points:

Reduce and Limit the Import of Sugar

• APTRI pushed the government to reduce and limit the import of sugar. They supported their appeal by presenting the fact that there are excessive amount of imported sugar indicated by many seepage of refined sugar in some areas.
• APTRI supports the government's plan to establish sugar cane-based sugar factory that produces white sugar, so that domestic needs are more easily met. But APTRI asks the government not to let the sugar factory grinds imported raw sugar.
• APTRI urges that efforts to reduce imports are done consistently, and imports should be if needed. At the same time, APTRI highlights the importance of the improvements in refined sugar management. APTRI supports the government’s plan in conducting online refined sugar auction system.

Farmers’ Welfare

APTRI assumes that should there be a commitment to self-sufficiency sugar, a significant aspect to realize it is to ensure the welfare of the sugar farmers to gain their commitment to plant sugar cane. In addition to that, it’s learnt that sugar cane farmers are increasingly marginalized and this meeting is a good momentum to realize the effort to make sugar cane farmers more prosperous.

Analysis

APTRI seems to be consistent in opposing the government’s plan to import sugar regardless by giving other arguments as described in the following chart:

Chart 3. Logics presented by APTRI during their 2017 National Working Meeting

In the above chart, the basic idea of APTRI arguments lay on the self-sufficient sugar. This is relevant to what Bambang Haryo mentioned (see Rejecting to Accepting in about 2 Weeks above).  Bambang Haryo thinks that the raw sugar import program must be accompanied by efforts to seriously self-sufficiency sugar. Thus, the nation will not be dependent on imported sugar.

I think this is a smart move from APTRI in trying to oppose policy in importing sugar and at the same time advocating their concerns.

AUGUST 2017

In August 2017, their advocacy continued by rallying in front of the State Palace according to a report by Tempo.co and edited by Wawan Priyanto.  The action is a statement of the attitude of sugar cane farmers throughout Indonesia against government policies which is considered to be detrimental to sugar cane farmers. They argued that they’re down due to the high amount of imported sugar in many markets thus local sugar cane farmers are not competing. To change the protracted downturn two months ago, the sugar cane farmers demanded that imports of sugar for consumption be limited to the needs and not marketed during the milling season.

According to APTRI monitoring, the price of sugar farmers this year dropped sharply by an average of IDR9,000 - IDR9,500 per kilogram. Whereas in 2016, the average price of sugar is between IDR11,000 and IDR11,500 per kg. Therefore, farmers asked for sugar from farmers bought at IDR11,000 per kg instead of IDR9,700 per kg. "We do not want the farmers to die in their own country," said Dwi Irianto, Chairman of the Regional Representative Council APTRI Malang.

They feel the price of IDR11,000, that the farmers ask, is very realistic since the cost of their production reached IDR10,600 per kg. Sugar cane farmers also demand that the highest retail price be raised to IDR14,000 per kilogram or remove the HET provisions. Guaranteed sugar level at least 8.5 percent is also a farmer's request.

In addition to that, they demanded the revitalization of sugar mills owned by state-owned enterprises, the provision of seeds or seeds, as well as funding through small business loans to be facilitated. They also ask the government to return the policy of subsidized fertilizer to the old rules that are considered simpler and not burdensome.

Analysis

APTRI is in this report is highlighting the welfare of the farmers. Their logic and resistance, in my understanding, is as follows:

Chart 4. Logics Presented by APTRI during August 2017 Rally.

OCTOBER 2017

Political Background

Regardless to the statements and views from APTRI, Primadhyta (2017) reported that the government cut the import tariffs on raw sugar imports from Australia and New Zealand. This policy bases on the proposal from Ministry of Trade as the follow-up out of Indonesia-Australia Comprehensive Economic Partnership Agreement (IA CEPA). This policy is stipulated on Minister of Finance Regulation No. 129/PMK.010/2017 concerning Amendment of PMK No. 28.PMK.010/2017 concerning Stipulation of Import Duty Tariff for Free Trade Area (ASEAN-Australia-New Zealand ASEAN-Australia-New Zealand Free Trade Area/AANZFTA).

In the beleid signed by Sri Mulyani on September 19, the government cut import duty on sugar cane or beet sugar and pure sucrose, in solid form, to 5 percent. Previously, the amount of import duty is in accordance with Most Favored Nation or at least 8 percent. This regulation is valid for fourteen days since its promulgation on 20 September 2017. Earlier, Chairman of the Indonesian Delegation in IPA CEPA negotiation Deddy Saleh stated that, in return for the import duty of imported raw sugar, Australia will free import duties on herbicide and pesticide products from Indonesia.

In addition to that, government is requesting to increase access to Australia. Trade to Australia is indeed increasing but is still deficit. Based on data from the Ministry of Trade, last year the imports of raw sugar reached 600,000 tons from the total domestic demand of 5.6 million tons. Most imports of raw sugar come from Thailand followed by Australia and other countries.

Chart 5. The Background of Cutting the Import Tariff.

It is clear that there is a bilateral agreement for the benefit on both sides as the background in the making of the policy to cut import tariff on raw sugar from Australia and New Zealand. This policy is to ensure the fulfillment of the national demand for sugar.

In a couple of weeks, APTRI responded by stating that there has been no positive response from the government related to demonstrations by some farmers related to the injustice of sugar sales last August (Muthmainah, 2017). APTRI feels that APTRI has never been included in decision making related to sugar sales. In fact, there are some regulations that are considered detrimental to farmers. One fact was presented where farmers are prohibited from selling bulk sugar directly to consumers. Now, sugar farmers’ productions can only be bought by the Agency for Logistics (Bulog) with prices that do not match production capital. Thus, farmers do not gain profit out of the sale.

In addition to that, the amount of sugar imports made earlier this year of 400 thousand tons is also considered to destroy local sugar sales as the amount of imports exceeds the national sugar demand.

Meanwhile, Director General of Foreign Trade Ministry of Trade Oke Nurwan explained that the demo at the end of August only relates to the sale of sugar that is not absorbed by Bulog because of its substandard quality. He further added that the problem of sealing some factories by the government is also a problem that still continues to be studied together. However, Oke asserted, the inappropriate quality of sugar is not the farmer's fault as it’s produced in the factory while farmers (merely) submit sugar cane to be produced.

APTRI plans to take further action.

REFERENCES

Aco. H(Ed.). (2017, July 20). APTRI Desak Pembatasan Gula Impor. Tribun News. Retrieved from http://www.tribunnews.com/bisnis/2017/07/20/aptri-desak-pembatasan-impor-gula

D Perwitosari. (2012a, November 30). ‘Kasarnya’ Tari Tayub dan Tari Topeng Pada Saat Ini. Retrieved from http://diyahperwitosari.blogspot.co.id/2012/11/kasarnya-tari-tayub-dan-tari-topeng.html    

D Perwitosari. (2012b, November 30). Review: Jawa (Bandit – Bandit Pedesaan), Suhartono W. Pranoto. Retrieved from http://diyahperwitosari.blogspot.co.id/2012/11/review-jawa-bandit-bandit-pedesaan.html

Muthmainah, D. A. (2017, October 19). Pemerintah Dinilai Acuhkan Protes Petani Soal Polemik Gula. CNN Indonesia. Retrieved from https://www.cnnindonesia.com/ekonomi/20171019183321-92-249593/pemerintah-dinilai-acuhkan-protes-petani-soal-polemik-gula

Indonesia, CNN. [CNN]. (2016, May 26). Petani Tebu Tolak Impor Gula. Retrieved from https://www.youtube.com/watch?v=QlLNIvUcSf4

Priyanto, W(Ed.). (2017, August 28). Protes Impor, Petani Tebu: Kami Tak Ingin Mati di Negeri Sendiri. TEMPO.CO. Retrieved from https://bisnis.tempo.co/read/903989/protes-impor-petani-tebu-kami-tak-ingin-mati-di-negeri-sendiri

Primadhyta, S. (2017, October 03). Pemerintah Pangkas Bea Masuk Impor Gula Mentah Australia. CNN Indonesia. Retrieved from https://www.cnnindonesia.com/ekonomi/20171003081340-78-245721/pemerintah-pangkas-bea-masuk-impor-gula-mentah-australia/

Safaat, A. S. (2016, June 11). APTRI Pahami Rencana Impor “Raw Sugar” BUMN. Antara News. Retrieved from http://www.antaranews.com/berita/566778/aptri-pahami-rencana-impor-raw-sugar-bumn

Suhartadi, I. (2016, January 13). APTRI Tolak Rencana Impor Gula Putih. Berita Satu. Retrieved from http://www.beritasatu.com/ekonomi/340939-aptri-tolak-rencana-impor-gula-putih.html