An Overview of Sugar Sector in Indonesia

Abstract

Indonesia currently has 63 sugar mills owned by 18 companies. The majority of these factories are old because of underinvestment and have low rates of productivity. The country’s sugar factories have a total capacity of 245,900 TCD or an average of 3900 TCD per factory with rendement of 7.1%. Indonesian sugar consumption within the consumer retail segment is 3 million tonnes per year, while national sugar production is only about 2.5–3.0 million tonnes per year resulting in a shortfall of 300–500,000 tonnes of sugar. Many issues continue to plague the Indonesian sugar industry, ranging from aging factories, reduced sugarcane fields, lack of good varieties, farm inefficiency, poor adoption of technology, slow pace of product diversification and low productivity to a flood of cheap imported sugar due to poor market regulation. Lack of adequate R&D support to the industry is also one of the reasons of low productivity, sugar recovery and loss of technical efficiency. The challenge of cheaply imported sugar into Indonesia serves to highlight the scale of demand for the commodity which places Indonesia among the world’s largest buyers by volume, particularly from the country’s food and beverage manufacturing sector. The bright prospects for investment in the national sugar industry are evident from the growing interests of the private sector to invest in the sector. Besides, the government also plans to revitalize existing sugar units, expand cane area and setup a few new sugar units in collaboration with the private sector to realize the plan of self-sufficiency.