Monday, 18 July 2016


Among the challenges faced by the sugar industry in Indonesia was efficiency. Today per kg production cost of sugar in Indonesia was higher than that in other countries. To meet such objectives PTPN XI enhanced efficiency by way of automatization in sugar mills. Doly Pulungan, Director of PTPN XI told BuisnessNews.

So far sugar mills had been using energy excessively at PTPN XI this was overcome by building broilers with pressures of 48 bars against the previous 20 bars. Thereby there would be over supply of energy which could be sold to PLN. Besides, electricity cost could be minimized because it was self produced.

The fund was taken form State Capital amounting to Rp.400 billion, today Djatiroto Sugar Mills produced 7,500 TCD and 2017 to be increased to 8.500 TCD and in 2019 to become 20.000 TCD. This was most important because the smaller the capacity the more inefficient it would be.

Djatiroto Sugar Mills as supported by 12,000 ha of land producing 110 tons of sugar per Ha. The land was not wide enough for such big capacity so the biggest supply was still from farmers. Farmer’s sugarcane productivity was 80 tons/ha and must be increased to 100 tons/ha.

Besides PTPN XI had injection of another Rp.250 billion for increasing capacity of PG Asembagus which could produce premium sugar. The present capacity was 2,400 TCD to be increased to 4,500 TCD in 2017 and to become 6,000 TCD in 2019. The land possessed was 2,000 ha so sugarcane supply were mostly from farmer’s land covering 4,000 ha.

In the first year the cost was Rp.650 billion from PNM and Rp.50 billion from internal cashbox. Total fund needed in 5 years was Rp.3,2 trillion. Each year PTPN would propose PNM while the rest would be obtained from Bank Syariah was more profitable compared to conventional banks.

All the effort was done for preparations to anticipate AEC. Indonesia’s main competitor in sugar business was Thailand, therefore production cost must be downsized to at least the same level as Thailand. Today production cost of sugar in Indonesia was Rp.8,500 while in Thailand it was only Rp.5,000/kg.

Besides Asem Bagus and Djatiroto 5 other sugar mills belonging to PTPN XI would also be automated. “The key to success is technology, without technology we would be outsmarted. In India in sugar mills of 5,000 TCD the number of workers was 100 to 200 people. In Indonesia in sugar mills of 1,000 TCD the number of workers was 700 – 800 workers.

In accordance with the program of the provincial Government of East Java that all efficiency programs in sugar mills must not cause unemployment, the unemployed workers would be employed as machine operators.

With new machines it would be possible to produce ethanol for fuel. Fuel cost which had been Rp.65 billion could be reduced to Rp.65 billion or even zero Rupiah.

In sugar business the margin was thin because the market tend to be oligopolic where buyers dominated the market and producers. Therefore the focus was not only on sugar but also on other products like animal feed from sugarcane pulp with capacity of 150 ton month and bio ethanol with fuel grade at the capacity of 150 km/day.

According to Production Director Budi Ari Prabowo beside automation, improvement was also executed on seeds to yield Premium plant. PTPN XI collaborated with the Indonesian Sugar Research Center to increase farmers’ productivity from the present 63,000 tons of sugarcane/ha to at least 80 tons sugarcane/ha.

Operations on farm was by space planning of land. Farmers land was consolidated in one expense of at least 5 ha. The main obstacle was that farmers were reluctant to combine in groups, and yet in Thailand and Australia, farmers joined in groups and they were successful.

The Ministry of Agriculture was now extending aid in the form of four-wheel tracktors. It was expected that for every 300-400 ha the number of tractors was 8 to 10 units to make it ideal.

Sugar production of PTPN XI was to be increased from 400,000 tons to 500,000 tons, the quality was also increased not just to supply household needs but also for F&B industry. (SS)

Business News - October 2, 2015

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