Indonesia has raised the 2009 floor price for white sugar for household use by 7 percent to factor in higher production costs, an official said on Monday. "The government has set the minimum white sugar price from farmers cane plantations for 2009 at 5,350 rupiah ($0.473) per kg," said Bayu Krisnamurthi, a deputy to the chief economic minister.
The hike in the ex-factory price from to 5,800 rupiah per kg in 2008 was short of the 16 percent increase proposed by the Indonesian Sugar Association. The government normally sets the floor price before the start of the crushing season, which lasts from May to November in the main producing island of Java, which accounts for over 60 percent of the countrys white sugar output.
Sugar millers usually have deals with investors, mostly sugar traders, who agree to pay the floor price in the event of a fall in price. Prices typically come under pressure at the peak of the crushing season. Krisnamurthi said for this year, the government will ask state firms, instead of traders, to support prices.