National self sufficiency model of white crystal sugar with system dynamics approach

Abstract

White Crystal Sugar (GKP) is a type of direct consumption sugar from sugarcane. Sugarcane plantations in Indonesia is dominated by smallholder farmers with low productivity. This led to the low production rate of white crystal sugar, moreover this rate is actually lower than the consumption rate. As a result, sugar production cannot meet domestic consumption, thus importing sugar is the easy solution to fill the gap. Efforts to reduce dependency on imports of white crystal sugar prompted the government to implement the National Sugar Industry Revitalization program (RIGN) to achieve self-sufficiency of white crystal sugar on 2014. Achieving self-sufficiency of white crystal sugar in the future will be influenced by factors related to the supply of raw materials, processing, trading and sugar demand, either individually or as a result of the interaction between these factors. Therefore, it was important to analyze the dynamic of self-sufficiency thru a self sufficiency model of white crystal sugar which covers all the four sub-models. The purpose of this study were to (1) study the possibility of achieving self-sufficiency of white crystal sugar, (2) study the impact of RIGN policy on self-sufficiency of white crystal sugar achievement, and (3) formulate scenario and alternative policies to reach the national self sufficiency of white crystal sugar. Data were analyzed by building the system dynamic model using powersim studio tool. The simulation period was from 2010 to 2025. RIGN policy impacts were analyzed using three scenarios: (1) scenario 1 (increasing land area 3.2 percent per year), (2) scenario 2 (increasing productivity of sugarcane 1.6 percent per year, (3) scenario 3 (increasing yield 1.41 percent per year). While to formulate alternative policies used four scenarios, which were: (1) scenario 4 (decreasing population growth to 1.3 percent per year), (2) scenario 5 (a combination of increasing land area 3.2 percent per year and decreasing of population growth to 1.3 percent per year), (3) scenario 6 (a combination of increasing productivity 1.6 percent per year and decreasing population growth to 1.3 percent per year, (4) scenario 7 (a combination of increasing yield 1.41 percent per year and decreasing population growth to 1.3 percent per year. The results showed that, on actual conditions, national self sufficiency of white crystal sugar will not be realized during simulation period. In 2010, the deficit of white crystal availability is 0.12 million tonnes. If there is no policy, the deficit of white crystal sugar availability will increase to the end of the simulation. The deficit of white crystal sugar availability in 2025 is 1.23 million tons. While in 2014, the deficit of white crystal sugar availability is 0.30 million tons. This means self-sufficiency of white crystal sugar targeted by the government in 2014 will not be achieved in actual conditions. The results of RIGN policy impacts analysis showed that increasing sugarcane yield policy would have better performance compare to increasing productivity and increasing land area policies. Thru increasing sugarcane yield policy, Indonesia is predicted to reach self-sufficiency of white crystal sugar on 2014 to the end of analysis period. The deficit of white crystal sugar availability in 2014 is 0.2 million tons by scenario 1 and 0.19 million ton by scenario 2. While the surplus of white crystal sugar in 2014 by scenario 3 is 0.06 millions ton. The results suggested that policy scheme which combines provision and needs is necessary. A combination of increasing sugarcane yield and population management policy would give the best performance. By this combination policy, Indonesia is predicted to reach self-sufficiency of white crystal sugar in 2013 to the end of simulation period. This is because the results of sensitivity analysis showed that sugarcane yield is a very sensitive variable and population is a highly sensitive variable. The deficit of white crystal sugar availability in 2014 is 0.27 million tons by scenario 4, 0.17 million ton by scenario 5 and 0.16 millions ton by scenario 6. While surplus of white crystal sugar availability in 2014 by scenario 7 is 0.05 millions ton. The results of switching value analysis indicate that the attainment of self-sufficiency of white crystal sugar in 2014 through increasing sugarcane yield and decreasing population growth can be achieved when an increasing of sugarcane yield is not less than 0.99 percent per year. In other words, self-sufficiency of white crystal sugar can be realized when the achievement rate of scenario 7 at least 70.21 percent from the target. Alternative policies that should be implemented by the government to achieve self-sufficiency of white crystal sugar are: (1) continue to implement the RIGN program, (2) implement RIGN by focusing on increasing sugarcane yield and (3) reduce population growth. Operational steps that can be taken to improve sugarcane yield are varieties and seeding arrangement, the application of technical raw cane cultivation, the proper determination of starting grinding, a good cutting, unloading and transporting management, and increasing overall recovery. For further research, it is suggested to develop the sugar industry model by including refined sugar industry in the simulation.