Indonesia to double sugar output despite climate deal

JAKARTA, June 18 (Reuters) - A climate change deal with Norway to save natural forest will not hamper Indonesia's effort to double its sugar output by 2014 as the extra land needed will not use primary forests, the agriculture minister said on Friday.

Indonesia will suspend new concessions for the conversion of natural forest and peat lands for two years under a $1 billion climate change deal signed with Norway in May.

But Southeast Asia's biggest sugar consumer also wants to double its sugar output to 5.7 million tonnes in 2014 to end its dependence on imports, the government has said.

To achieve this target, the government is planning to revitalise existing sugar mills, build new mills and open up 300,000 hectares of new sugar cane plantations.

"It will not affect the sugar self-sufficiency programme because it won't use primary forests and peat land," the agriculture minister Suswono told reporters.

Based on government data, there are 2.89 million hectares of neglected land that can be used for food crops and energy, including for expanding sugar cane plantations, he said.

"But we need to wait until the government finishes with its spatial planning before the land can be used," the minister said.

Suswono said the climate change deal will also not affect the planned Merauke giant food estate in Indonesia's eastern Papua region as it is not in primary forest or peat lands.

Planters, particularly palm oil firms, have protested against proposals that aim to cut Indonesia's high rate of deforestation, saying this would hurt investment and cut expanding output. For a Q+A story see [ID:nSGE65209C].

Indonesia is expected to produce around 2.7 million tonnes of white sugar this year, below an initial target of 2.99 million tonnes as prolonged rain could lower the sugar content in cane.

White sugar produced by local cane plantations is sufficient for direct consumption, but the country still imports over 2 million tonnes of raw sugar to produce refined sugar for industrial use and for sugar mills to fill capacity when cane output is lower than expected.

Indonesia's unexpectedly high imports early this year helped drive world prices LSUc1 to a record high in January, and the highest costs led to interest in boosting domestic cane output.

The premium of local prices over world prices is leading investment firm Rajawali Group to buy land for sugar production in the planned Merauke project in Papua, Rajawali's managing director told Reuters [ID:nSGE65D01V].

(Reporting by Yayat Supriatna; Writing by Fitri Wulandari; Editing by Neil Chatterjee)