Competitiveness Analysis of Sugarcane Farming System and Structural Adjustment of Sugar Industry in East Java

Abstract

Sugarcane is considered to be a high-valued commodity since Colonial era. The Highest sugar cane production in Indonesia was in 1930 and Indonesia became the second highest exporting sugar country at that time. However, the performance of sugar industry has declined during the last decade. Now, Indonesia has become an importing sugar country. This situation is more likely because Indonesian population grows in the average of 1.2% every year, which influence the direct sugar consumption every year. Indonesia’s sugar consumption is always exceeded its production. In order to fulfill the domestic consumption, Indonesia needs to import sugar. Based on the economic performance of sugar industry, the main issue of sugar industry in Indonesia is low increase of productivity and production in farm and sugar mills level, especially in East Java. Some factors are suspected to influence the productivity and production sugar performance. The objective of this research is to analyze competitiveness of sugar industry, especially in sugarcane farming system, impact of government policy and structural adjustment on sugar industry.

Sebagai salah satu industri manufaktur yang tertua, Indonesia pernah mencapai era keemasan industri gula pada tahun 1930-an dengan menjadi eksportir gula terbesar kedua di dunia setelah Kuba. Saat itu pabrik gula yang beroperasi adalah sebanyak 179 pabrik gula, produktivitas sekitar 14.8 persen dengan produksi puncak mencapai sekitar 3 juta ton dan ekspor gula pernah mencapai 2.4 juta ton (Sudana et al, 2000).