From Sugarcane to Sugar, Indonesia's Inefficient Route

They finance the supporters in Entikong in West Kalimantan, which borders directly with Malaysia, to shop for sugar in the neighboring country. Malaysia is not an exporting country. The neighboring country procures sugar from Thailand. Although Entikong residents get sugar officially from Malaysia which is sourced from Thailand, the price is still cheaper than the sugar produced by hundreds of sugar factories in Indonesia. “This can happen due to the efficiency of sugarcane farming and sugar production in Thailand, which is much better than that in Indonesia. This will become a threat to the sugarcane and sugar production in Indonesia if the AEC takes effect,” said Sahat M. Pasaribu, Agricultural Economist from Bogor Institute of Agriculture (IPB). According to Sahat, one key to the success of the sugar industry in Thailand is its high productivity. It makes the yield to reach more than 10%. With the high productivity of sugarcane land, the sugar industry in Thailand has strong competitiveness in the world sugar market. The result of cost analysis shows that the sugar production cost in Thailand is the lowest worldwide. In 2011, there were 47 sugar factories in Thailand which produced more than 100 million tons of sugar cane and 10 million tons of sugar/year.
In 2013, its sugarcane production has increased again to more than 105 million tons and its export reaches 9.3 million tons. In 2014, Thailand's sugar production reached 11 million tons with a local consumption of 2.5 million tons/year. “Now Thailand is recorded as one of the largest sugar exporter in the world,” says Sahat. Thailand is now far leaving behind Indonesia which used to be the world's second largest sugar producer in the 80s. Now Indonesia has become a sugar importer. One of the causes of the low sugar production in Indonesia is the issue of efficiency. Especially in terms of sugarcane, because the average level of sugarcane yield in Indonesia only ranges from 5-6 percent. It is far lower than Thailand's which reaches more than 10 percent. There are many factors that cause this. For example, the sugarcane land which is now much reduced, the irrigation system which is not good yet, uneconomical fertilizer, and the lack of farmer's capital. If this can be overcome, there is also another factor that causes the inefficiency of sugarcane production into sugar.
The poor cultivation management sometimes results in lower sugarcane yields from the farmers. The longer the sugarcane is dry or delayed in the harvest, the lower the yield result will be or not at its best. “For example, in terms of sugarcane harvest and its transportation to the factory. It often happens that the sugarcane farmers bribe the sugar factory to get their land harvested first so that their sugarcane harvest will not dry out and its yield will be good,” says Sahat. In order to increase the sugarcane yield and efficiency in the production process from sugarcane into sugar, a breakthrough must be made by the government which works in partnership with the private sector. Starting from the credit granting, good cultivation management, to the optimal harvest and production process. In addition to the revitalization of the sugarcane factories so that they can produce a maximum yield and their production capacity can be increased. If this efficiency can be carried out well, then the government purchase price (HPP) for sugar cane can be created. Of course, this HPP for sugarcane is created with a price that is attractive to the farmers and encourages them to grow sugarcane which will produce sugar. Editor: Toni Bramantoro http://www.tribunnews.com/bisnis/2016/03/02/dari-tebu-ke-gula-kurang-efisien-di-indonesia?page=3