TMCnet News

[January 30, 2006]


(English IPS News Via Thomson Dialog NewsEdge)by Kafil Yamin

MANADO, North Sulawesi, Jan. 30, 2006 (IPS/GIN) -- When Indonesia gets the world's first palm sugar factory up and running in June, it will reverse a trend that turned this country from the world's second biggest exporter of sugar to the second largest importer. It may also help curb the practice of clear cutting valuable forest land under the guise of establishing plantations.

Currently, Indonesia's domestic sugar consumption contributes to an already heavy external debt burden. At 3.5 to 4 million tons a year, sugar consumption is more than double the country's 1.7 million ton annual production.

But by the end of the year, the Masarang Sugar Palm factory should be producing ten tons of sugar annually, reducing imports and netting scarce foreign exchange. The factory and a 2,000 hectare plantation are run by the Masarang Foundation, a non-government organization (NGO) specializing in environmental conservation. The new plant will introduce an eco-friendly industry and provide jobs in this far-flung island of the Indonesian archipelago.

"This factory is efficient, labor intensive and environment friendly because it uses limited electricity and does not produce waste," said Willie Smits, chair of the Masarang Foundation.

Using geothermal energy for fermenting the palm juice and pool-stored rain water for cooling, the plant then maximizes efficiency by piping geothermal exhaust back into the soil.

Because it is a cooperative, the factory involves 1,400 sugar palm tappers, each of whom supplies two liters of sugar palm juice daily.

Smits said all raw material will be supplied by local growers, who are members of an association of sugar palm farmers that share profits and have ownership stakes in the factory.

Germany, Switzerland and Holland are the first export destinations and will take up some 60 percent of production. The rest will ease domestic demand.

Despite a 20 percent increase in production from 1.4 million tons in 2004, imported sugar continues to flood the domestic market with lower prices and better quality, causing a number of domestic sugar mills to falter.

As Europe eases subsidies on sugar, prices are bound to rise. "The increased prices will affect the domestic sugar market. So this factory will definitely be a big advantage for Indonesia," Smits told IPS.

"This not only the first palm sugar factory in the world but it is also the first sugar factory run by an NGO," he added proudly.

So far, sugar palm has been produced traditionally by sugar palm farmers and marketed locally. It has little economic value and any profits come from brewing palm wine which contributes to social problems. With new food-processing technology available, sugar palm can be used to produce ethanol, ketchup, and various soft drinks, Smits said.

Ventjeu, a sugar palm farmer in Tomohon, said farmers pick up 10 liters of palm juice a day on average. "So far, we are only able to sell five liters a day. Now with this factory around, we will be able to sell as much as twenty liters a day, which means $14 US dollars a day," he said optimistically.

Most of the sugar mills, currently under threat in Indonesia, are those run by state-owned enterprises, which cover a broad range of agricultural commodities, from tea and palm oil, to tobacco and sugar.

Palm sugar was traditionally made from the sap of the sugar palmyra palm. The sap is collected in bamboo containers and then cooked for several days and the residual molasses is poured into coconut shells and allowed to harden into a cake. The brown cake has a coarse, sticky texture and is used in many Asian preparations.

Ventjeu said a major advantage of palm sugar is that the trees can be tapped year round, ensuring continuous production and income, compared to the seasonal harvesting of cane sugar.

Smits, who has been campaigning for environment conservation in Indonesia for three decades, believes the palm sugar industry can provide a good alternative to the palm oil plantations that are causing serious environmental degradation in Indonesia.

Large forest areas in Sumatra, Kalimantan and Papua have been converted into oil palm plantations. Worse, unscrupulous business people in connivance with officials set up investment proposals at cut rates and vanish after clearing the forests of valuable timber.

"Why do they always grow the palm oil on forest area? Why don't they just grow it on bush land? Indonesia has millions of hectares of bare bush areas. Why is there not a single palm oil company willing to set up plantations on this unused land?" Smits demanded.

Until now, the government has allocated 30 million hectares of forest for oil palm plantations, adding to the existing 3.2 million hectares. Every year, 330,000 hectares of forest is targeted for conversion into new plantations and currently 650 investors -- 75 percent of them foreign owned -- are waiting in line to convert forests into oil palm plantations.

NGOs in Indonesia have long been campaigning against the plantations' negative impact on the environment and the livelihoods of indigenous peoples. But even when they resort to setting forest fires that severely pollute the atmosphere over neighboring Malaysia and Singapore, the NGOs have proven ineffective against the lobbying power of the big plantation companies.

Palm oil plantations also bring in high levels of agrochemical inputs -- fertilizers and insecticides -- that have polluted rivers and caused large-scale land erosion, loss of soil nutrients and river pollution.

Even worse, sometimes plantation owners never plant oil palm trees after stripping the forests of timber. Of the 7.2 million hectares allocated during the 1990s, only 530,000 hectares or 7.5 percent were actually converted into plantations by 2005.

Smits said this indicated that oil palm investors were more interested in timber stands on the allocated lands rather than plantation projects. Around 75 percent of the new oil palm projects are allocated in production forests with rich timbers, providing a pre-start up bonus in the form of timber sale proceeds.

After clearing the timber stands, many companies abandon the project altogether. In the province of Jambi, around 800,000 hectares of forest, cleared ostensibly to set up oil plantations, was later abandoned. In Landak district, West Kalimantan some 300,000 hectares lie similarly neglected.

Smits is convinced that promoting the sugar palm industry will help Indonesia not only to achieve self-sufficiency in sugar, but also show the way towards cleaner, sustainable development.

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