SUGAR MILLS IN JAVA STILL PLAYING IMPORTANT ROLE

Although the role of other islands, especially Lampung, Sumatra was Development to be the future sugar center, fact still showed that 65% of Indonesia’s sugar was still produced in sugar mills in Java. It proved that at least in a few years to come Java, the site of 50 sugar mills of the 64 sugar mills in Indonesia, was still the leader of sugar-producing islands politically and economically, especially to consider that most sugar canes as raw materials came from farmers. This was disclosed by Ir Tito Pranola, Executive Director of the Indonesian Sugar Association (AGI) to the press on Monday (7/9).

Internally sugar mills in Indonesia faced the problem of tight competition for land possession so sugar canes plantations tend to move to dry soil of low fertility, cultivation technique not being applied as technically recommend, and varied production cost. Aging machines with obsolete technology, revitalization barely for maintaining performance and not integrated. Externally, farmers were set free to cultivate any agro commodity regarded as profitable, no integrated policy, and illegal rafinated sugar being in circulation.

By competitiveness, sugar mills in Java could be classified as follows:

• Strong : generally sugar mills of large size with milling capacity of > 5,000 tons of sugar cane per day (TCD) strong competitiveness against other agro commodities and areal expansion possible. Sugar Mills of this category could compete against imported sugar.
• Moderate : generally of 3,000 – 5,000 TCD moderate competitiveness, fluctuative raw materials, area expansion possible although to for flung locations. Sugar cane of this category normally obtain sugar cane in sufficient amount if price of sugar were low in the next year there would be sort age of sugarcane due to lack of supply from farmers.
•  Weak : generally of capacity less than 3,000 TCD, competitiveness low, shortage of sugarcane, obsolete technology, and high unit cost, minimum geographic potential and expansion.

Sugar mills of the strong category could step upon performance through revitalization process the integrated way so a not only to products sugar and juice but also by-products so units cost could be gradually reduced. Sugar mills of the Moderate and Weak category should have their performance stepped up so as to produce sugar of competitive unit cost.

In coping with changing environment which was dynamic such as the Asean single market, a question arose was there still; chance for sugar mills in Java? A new business model which could be developed to enhance the role of sugar mills in Java would be needed.

What was cooperated action need to enable them to cope with trade liberalization, step up farmer’s welfare and strengthen national soverignity? The National Seminar in Yogyakarta on September 2015 conducted by AGI and IKAGI was expected to answer some key issues to ward self reliance in sugar Production Development.

By August 15, 2015, 54 sugar mills in all of Indonesia had milled 16.3 million tons sugar cane and produced 1.24 million tons of sugar, Sugarcane was obtained from 225 hectarwes of sugarcane plantation with productivity of 5.51 tons/ha.

Java still contributed greatly, producing 686 thousand tons of sugar obtained from 127 thousand ha of plantation, milled sugarcane 9,4 million tons and productivity 5.42 tons.

Milling at sugar mills would last till October 2015 some sugar mills ever till one of November 2015 depending on the amount of sugarcane available. Generally speaking agro climate in milling season of 2015 was influenced by El Nino.

Yields normally increased by because photo synthetic was better and harvest was running well without rain disturbance. Sugar production was in total determined by remnants of un milled sugarcanes.

Further drought effect was disturbed growth and sugarcanes planted in 2015/2016 to be milled in 2016. Cultivation management was needed by prioritizing the application of bio-fertilizer which enabled water holding capacity o increase on plan cane or ratoon.

Price of sugar at producer level was around Rp.9.450./kg. Although still above farmer’s prince of Rp8.900/kg the price was still way beyond farmer’s expectation to make reasonable profit.

Sugar producers were expecting the Government would control stock thoroughly, among others by preventing entry of Rafinated sugar. The Government was also asked to redefine use of 350.000 to 500.000 rafinated sugar which had been allocated for small and medium industry, but in reality many industries preferred to sugarcane based sugar as raw materials. (SS)

Business New - September 11, 2015