Indonesian Sugar Production and Recommendations for Industry Recovery

Abstract

The history of the Indonesian sugar economy reveals a gloomy story of decline from being one of the largest exporters to the world’s biggest sugar importer. The suspected reasons for that reversal of status are that sugar production practices have not kept up with prominent international producers such as Australia, Brazil, and Thailand. The yield of Indonesian sugarcane is apparently reasonable, even higher than that achieved in Thailand as the second largest sugar exporter, but harvesting techniques, time of harvesting, and the mills’ processing efficiency need to be improved. Furthermore, irrigation development and greater attention to fertilization could lead to improvements in both yield and cane quality, while better transportation systems could reduce sugar losses between harvesting and processing.

After discussing the causes of the Indonesian sugar industry’s failure to grow, the paper presents several recommendations to introduce better varieties of cane as a priority, through researcher and development. This might be achieved through collaboration with international sugarcane research centers such as strengthening existing links with Sugar Research Australia to support the development of better cane varieties and tackle disease issues. Such collaboration can be built through a bilateral agreement with terms and conditions agreed by both parties. Better harvesting techniques, including an assessment of the transition to mechanized harvesting, are required, something the government has already instructed. Furthermore, the number of sugar mills in the industry must be reduced, especially those old mills and can’t be revitalized easily. Better fertilizing strategies and better access to irrigation are needed to achieve increased productivity from cane growing land and it could be helpful to introduce rules to deliver sugarcane to nearby mills. If all of these issues can be addressed, and if the factors that led to the decline in the Indonesian sugar industry can be corrected, the prosperity of the sugar industry in Indonesia should be recovered.

Keywords: Indonesia, sugarcane, sugar production, yield, sucrose content

JEL Classification: C89, D20, D30, D70, D80, E60, F01, F43