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Sugar industry in Indonesia.

Current Issues

The country's sugar industry has declined in the past decade both in production and plantation Plantation, city (1990 pop. 66,692), Broward co., SE Fla., a residential suburb of Fort Lauderdale; inc. 1953. The city has grown rapidly along with the development of S Florida.  areas despite improvement in the past two years.

The country's sugar production in the past decade shrank shrank  
A past tense of shrink.


a past tense of shrink

shrank shrink
 by 1,8% annually on the average and the plantations PLANTATIONS. Colonies, (q.v.) dependencies. (q.v.) 1 Bl. Com. 107. In England, this word, as it is used in St. 12, II. c. 18, is never applied to, any of the British dominions in Europe, but only to the colonies in the West Indies and America. 1 Marsh. Ins, B. 1, c. 3, Sec. 2, page 64.  have not changed from 340,000 hectares in the past five years, The sugar content is also declining--with productivity down from 76.9 tons per hectares in 1990s to 62.7 tons in the 2000s.

Hoping to improve the performance of the industry, the government has announced plan to revitalize re·vi·tal·ize  
tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es
To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy.
 the industry with a production target set at 1 million tons in 2009.

Revitalization re·vi·tal·ize  
tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es
To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy.
 is aimed at increasing the production capacity of sugar factories, productivity and content of sugarcane sugarcane, tall tropical perennials (species of Saccharum, chiefly S. officinarum) of the family Gramineae (grass family), probably cultivated in their native Asia from prehistoric times.  and expansion of plantation.

At least 20 sugar factories have been proposed by industrialists to be included in the revitalization program, which is expected to have support from the banking industry. Revitalization of the 20 factories also including expansion of plantations is estimated to cost Rp 4.13 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time.

(mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed.

In the USA and Canada, 10^12.

Meanwhile the country's products of doubled refined sugar as a basic material for food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods.  processing industries are facing imported products, which are more competitive in prices.

Large imports of cheaper in price doubled refined sugar also have impact on the market of consumption sugar in the country.

Structure of sugar industry

Acreage of sugar plantations expanded

The biggest problem faced by the country sugar industry is shortage in supply of basic material as a result of shrinking plantation areas and the productivity of plantations.

Data at the Directorate General of Plantation Produciton Development show that in the past nine years, sugar plantations and productivity have declined significantly.

Many sugar factories, therefore, have operated below their installed capacity leaving large idle capacity. The industry, therefore, has low efficiency. A number of sugar factories in Java have a milling capacity of 23.8 million tons of cane cane, walking stick
cane, walking stick. Probably used first as a weapon, it gradually took on the symbolism of strength and power and eventually authority and social prestige.
 a year but they have only a supply of 12.8 million tons of cane a year. As a result they operate only at around 53.8% of their capacity.

Sugar factories outside Java have a processing capacity of 14.2 million tons of cane but annual supply of basic materials averages only 8.6 million tons leaving idle capacity of 39.4%.

Sugar plantations in areas are still dominated by smallholders plantations accounting for 50% of the total plantaiton areas.

Expansion of sugar plantations began in 2004 to 344,793 hectares up from 335,725 hectares in 2003. The plantations expanded further to 422,734 hectares in 2005 after the government set a target to achieve self sufficiency in 2007.

Sugar content of cane remains low

The sugar content of canes or the productivity of plantations has remained low in the past several years.

In 2000, cane sugar cane sugar: see sucrose.  content was 7.04% down to the lowest level of 5.85% in 2001. In 2002, it began to rise to reach 7.57% in 2004, before declining slightly to 7.60% in 2006.

More than 50% of sugar factories older than 100 years

It has been a long known fact that the country's sugar industry has been outdated out·dat·ed  
Out-of-date; old-fashioned.


old-fashioned or obsolete

Adj. 1.
 in technology using old machines, therefore, no longer efficient. The cane content fell to only around 6%-8% from 12% when the country was known as the world's largest sugar producer during the Ducth colonial time. Revitalization, therefore, has been too late. Around 30 units of 59 sugar factories in the country have been more than 100 years in age.

The oldest is the Gending sugar factory in East Java East Java (Indonesian: Jawa Timur) is a province of Indonesia. It is located on the eastern part of the island of Java and also includes neighboring Madura and Bawean islands.  coming on line in 1830 now having a milling capacity of 1,300 tons of sugarcane a day.

Most sugar factories in the country use the process of carbonization car·bon·i·za·tion  
1. The process of carbonizing.

2. The destructive distillation of bituminous coal, done in the absence of air in order to obtain coke and other fractions having a greater percentage of carbon than the
 and treatment with sulfite sulfite /sul·fite/ (sul´fit) any salt of sulfurous acid.

A salt or ester of sulfurous acid.
 turning out sugar with color of IU (ICUMSA ICUMSA International Commission for Uniform Methods of Sugar Analysis ) around 110-370.


The country's sugar production has tended to decline in the past 13 years--from 2,453,881 tons in 1994 to 1,488,269 tons in 1998 before rising to 2,051,645 tons in 2004 and to 2,314,712 tons in 2006.

The previous target of achieving self sufficiency in 2007, however, failed. The government postponed the target year to 2009.

PTPN PTPN Physical Therapy Provider Network
PTPN Protein-Tyrosine Phosphatase, Nonreceptor-Type
PTPN Preemptive Time Petri Net
 X and PTPN XI, largest producers

Sugar industry is dominated by state companies. There are six state companies producing sugar. They are PT Perkebunann plantationsNusantara (PTPN)--PTPN II, VII, IX, X, XI, and XIV.

The six companies contributed 70% to the country's total production of sugar in 2003. PTPN X and XI in East Java are the largest accounting for 35% of the country's total production.

In 2004, sugar production of PTPN, which operates 17 factories totaled 353,760 tons. The production increased as a result of replanting with new seedlings.

Produksi PTPN X 's produciton also increased substantially from 287,000 tons in 2003 to 350,358 tons in 2004. Increase was recorde dby both state and private companies.

Sugar production of Rajawali Nusantara Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago.  (PT Rajawali Nusantara Indonesia I) in Surabaya Surabaya, Surabaja, or Soerabaja (srəbī`ə, Du. s  rose from 106,698 tons in 2003 to 126,694 tons in 2004. The increase was attributable to expansion of plantations.

Increase in the sugar production recorded by RNI (Raw Native Interface) A programming interface in Microsoft's Java Virtual Machine used for calling native Windows elements such as GUI routines. RNI is Microsoft's Windows-oriented counterpart of Sun's JNI (Java Native Interface).  helped offset losses suffered by two of its sugar factories operated by Rajawali II in Cirebon--PG Karang Mount Karang or Gunung Karang is a volcano at the western most end of Java, Indonesia.

See also
  • List of volcanoes in Indonesia
Whitten, T; Soeriaatmadja, R. E., Suraya A. A.
 Suwung and PG Jati Noun 1. jati - (Hinduism) a Hindu caste or distinctive social group of which there are thousands throughout India; a special characteristic is often the exclusive occupation of its male members (such as barber or potter)  Tujuh.

PT Gunung Gunung is the Malay or Indonesian word for mountain - it is regularly used in volcano and mountain names throughout South east asia. E.g.
  • Gunung Kembar -> Mount Kembar
  • Gunung Merapi -> Mount Merapi
 Madu A madu (maru, singuata) is an Indian parrying and thrusting weapon. It consists of a pair of antelope horns fastened behind a small plate consisting of stretched leather, iron, or steel with the tips of the horns pointing in opposite directions.  Plantation and PT Gula Putih Mataram Mataram

Historic kingdom, Java. Originally a vassal state of Pajang, it became powerful under Senapati, who became its first king in the late 16th century. Its territory expanded in the early 17th century, but the kingdom later began to decline.
 in Lampung Lampung is a province of Indonesia, located on the southern tip of the island of Sumatra. It borders the provinces of Bengkulu and South Sumatra. The original inhabitant of Lampung is the "Lampung" tribe, who speak a distinct language from other people in Sumatra and have their own  also posted sharp increases of 22.3% and 62% respectively in 2004.

Imports of sugar, 2002-2006

The country's imports of sugar has tended to increase since 2002 to follow growing demand on the domestic market. In 2002, imports reached 970,926 tons, up to 1,119,790 tons in 2004 and to a peak of 1.98 million tons in 2005 before falling to 1,543,284 tons, valued at US$ 589,976,000 in 2006.

Imports 2007 only 47% of plan

The government allows imports up to 2.91 million tons this year but realization has only reached 47% or 1.38 million tons.

Based on data at the Trade Ministry, by Sept. 1, 2007, imports of refined sugar reached 99.71% of the import quota Import Quota

Puts limits on the quantity of certain products that can be legally imported into a particular country during a particular time frame. There is a Fixed quota, which is a maximum quantity not to be exceeded, and tariff rate surcharge, which permits additional quantities
 of 450,000 tons.

Imports of double refined sugar totaled only 552,650 tons or 48% of the quota quota

In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Quotas are more effective than tariffs in restricting trade, since they limit the availability of goods rather
 set for it.

Imports of raw sugar has also been not yet up to target. Raw sugar import is needed to utilizie idle capacity of sugar factories in the country. Raw sugar is divided into three categories--as basic material for white crystal sugar, as basic material for double refined sugar and for MSG MSG: see glutamic acid.  industry. See the following table.

Sugar Exports

Sugar exports have increased in the past several years to peak at 9,933 tons in 2004 after declining to 695 tons in 2003 from 816 tons in 2002.

Replanting and good prices in international market contributed to the surge in the exports in 2004. See the following table.

Government's policy

The government has issued series of regulations on sugar trade and industry including import duties as it is categoriuzed as a strategic commodity in the country.

It is not easy to issue regulations on sugar sector as it concerns growers Growers are the people, animals, plants, and various living creatures that assist in the growing of plants and other living creatures. More specifically, the term "growers" refers to individual people who put forth effort to grow plants for food and medicinal use, including the  and consumers representing large groups of people with conflicting interests. See the following table.

World's sugar industry and trade

In general, the world's sugar production has continued to increase since 2003. Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America.  is he world's largest producer with production rising from 26.4 million tons in 2003, to 28.175 million tons in 2005 and 28.7 million tons in 2006--or 19.42% of the world's total production.

The European Union has recorded a decline in production lagely because of shrinking plantation areas and consumption. Similarly a decline has been recorded by the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. .

The United States recorded a decline in production from 7,146 million tons in 2005 to 6,824 million tons in 2006 and Australia from 5,388 million tons to 5.2 million tons. India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , which is the second largest producer of sugar in the world has a 14.37% share of the world's total production increased its produciton from 14,2 million tons in 2005 to 18.4 million tons in 2006 and China from 9.8 million tons to 10.5 million tons. See the following table.

Sugar Consumption in developing nations tends to rise

Sugar consumption in India, China, Pakistan Pakistan (păk`ĭstăn', päkĭstän`), officially Islamic Republic of Pakistan, republic (2005 est. pop. 162,420,000), 310,403 sq mi (803,944 sq km), S Asia. , Indonesia and other developing nations has increased to follow the population and economic growth.

World's sugar policy protective

Sugar producing countries in the world including Indonesia have their own policies to protect their sugar industry. Major producers and consumers provide heavy subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare.  and protection causing market distortion A market distortion is a specific type of market failure brought about by deliberate government regulation which prevents economic agents from freely establishing a clearing price.  in the the world. Sugar prices in the world averaged US$ 8.36/lb in he past decade far below the production cost of US$ 17.46/lb.

Subsidy in the Unted States accounts for 67% of income of sugar producers. The United State uses Farm Security and Rural Investment Act of 2002 (2002 Farm Act) as the legal basis for its subsidy policy. Among important policies used to protect sugar farmers include price support loan, tariff-rate quota, export subsidy Export subsidy is a government policy to encourage export of goods and discourage sale of goods on the domestic market through low-cost loans or tax relief for exporters, or government financed international advertising or R&D. , re-export programs, and payment-in-kind.

West Europe Europe (yr`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000).  has worst distortion distortion, in electronics, undesired change in an electric signal waveform as it passes from the input to the output of some system or device. In an audio system, distortion results in poor reproduction of recorded or transmitted sound.  in sugar market. Government's interventions is found in almost all aspects in industry and trade. High import duties are slapped to protect domestic farmers.

Marketing aspects

Market size

The market size of sugar industry in Indonesia has expanded from year to year--from 2,725,543 tons in 2002 to 2,628,124 in 2003 and to a peak of 4,221,056 tons in 2005.

Sugar consumption low

Sugar consumers are households as direct consumers and industries as indirect consumers. Industries need sugar as basic material for their manufactured products such as food and beverage products.

Consumption of househod sugar in the country is low compared with in other neighboring neigh·bor  
1. One who lives near or next to another.

2. A person, place, or thing adjacent to or located near another.

3. A fellow human.

4. Used as a form of familiar address.

 countries. Per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals.  consumption in the country is only 13-14 kg a year as agains the world's average of 20 kg a year.

The low per capita consumption is attributable to weak purchasing power Purchasing Power

1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase.

 of the people.

Higher increase in sugar consumption in the country is recorded in the manufacturing sector. See the following table.

Sugar stocks

The prices of sugar in local market average Rp 6,500 per kg. The price is relatively expensive for the low income people. The high prices on the domestic market followed the prevailing prices in internaitonbal market when the price rose becasue of shortfall in supply.

The increase in the price of sugar in international market followed a decline in production in major producing countries like the Philippines, Thailand, China and India.

Long drought drought, abnormally long period of insufficient rainfall. Drought cannot be defined in terms of inches of rainfall or number of days without rain, since it is determined by such variable factors as the distribution in time and area of precipitation during and before  last year also caused a decline in domestic production. The trade director general of the home affairs ministry said the country's stock is sufficient until the end of this year despite a deficit of 600,000 tons including 200,000 tons for the industry.

In order to cover the deficit the government issued two decisions to import white sugar for buffer buffer, solution that can keep its relative acidity or alkalinity constant, i.e., keep its pH constant, despite the addition of strong acids or strong bases.  stock until May 2008. Stock by Sept. 1, 2007 totaled 700,050 tons, including 52% held by sugar factories, 34% held by traders and 9% held by farmers.

Sugar trade regulation maintained

Because of the strategic function of sugar, the government always intervenes in sugar marketing especially in imports. In the past the government's intervention A procedure used in a lawsuit by which the court allows a third person who was not originally a party to the suit to become a party, by joining with either the plaintiff or the defendant.  was even greater by giving the monopoly of sugar imports to state-run Board of Logistics (Bulog).

Since 1998, the government launched a series of deregulation Deregulation

The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

Traditional areas that have been deregulated are the telephone and airline industries.
 measures such as abolition The destruction, annihilation, abrogation, or extinguishment of anything, but especially things of a permanent nature—such as institutions, usages, or customs, as in the abolition of Slavery.

In U.S.
 of sugar subsidy and the use of sugar basic price.

In February 1999, the import duty on sugar was abolished at the same time with the abolition of Bulog's import monopoly.

In September 2002, the trade and industry minister issued a decision regulating again sugar trade by imposing import restriction.

Under the regulation, imports are allowed only by sugar producers and registered importers licensed by he trade minister. Importer producers are sate sugar factories and registered importers are companies needing sugar for basic material. The regulation was maintained with a new decision of the trade minister in September, 2007 that imports by sugar factories and registered importers are allowed only when the price of sugar on the domestic market exceeds Rp4,900 a kg.

Double refined sugar a threat to stability of consumer sugar market

Producers of cane based sugar repeated their opposition to entry of double refined sugar to the market of sugar consumption. The protest came with the marketing problem faced by local producers of double refined sugar because of imports of double refined sugar with low prices.

According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 Corporate Secretary of PT Perkebunan Nusantara (PTPN) XI Adig Suwandi, the decline in the price of double refined sugar will likely result in penetration of imported double refined sugar to the market of consumption sugar.

Local products of double refined sugar utilizing the processing facility of imported raw sugar is fit only as basic material for food and beverage industries. However, as the price of sugar is low in the world market, food and beverage producers tend to import refined sugar directly from producers abroad especially as the quality of imported products is superior.

Currently domestic production of double refined sugar average 1.1 million tons a year exceeding domestic requirement. Therefore, even without import, the local producers have to compete tightly on the domestic market.

Sugar distribution

Sugar produced in the country is generally sent to the market via sugar distributors. Private sugar factories use their won distributors and state sugar factories hold tender to selec distributors.

Distribution is also made through networks of modern retail outlets such as hypermarkets, supermarkets and minimakets. Hero supermarket for example, which has 60 outlets, buys 80 tons of sugar every month to be distributed through its chain stores. Indomaret, which has 600 minimarts outlets buys around 200 tons a month, Carrefour Hypermarket hy·per·mar·ket  
A very large commercial establishment that is a combination of a department store and a supermarket.


a huge self-service store [translation of French
 needs or sells around 8 tons of sugar a month for each of its outlets. However, distribution via the modern market outlets is still much smaller than distribution by traditional retailers. See the following diagram diagram /di·a·gram/ (di´ah-gram) a graphic representation, in simplest form, of an object or concept, made up of lines and lacking pictorial elements. .


As already said that the government has issued a regulation restricting distribution of imported sugar and bans interisland in·ter·is·land  
Relating to, involving, or connecting two or more islands: interisland competition; interisland ferries. 
 trade of sugar in a bid to prevent smuggling smuggling, illegal transport across state or national boundaries of goods or persons liable to customs or to prohibition. Smuggling has been carried on in nearly all nations and has occasionally been adopted as an instrument of national policy, as by Great Britain  into the country.

Sugar factories owned by the state such as PTP (1) See peer-to-peer.

(2) (Picture Transfer Protocol) An ISO standard for transferring photos from a digital camera to a computer or photo printer.
 Nusantara, which is licensed to import sugar are required to hold tender to select distributors for its imported sugar.

The state company often cooperates with whole traders in financing sugar imports. The compensation for the trader is the right to handle the distribution of imported sugar on the domestic market.

In 2004, PTPN IX and X cooperated with INKUD, and PT RNI cooperated with PT Citra Gemini Mulia. Other sugar distributors such as PT Kentjana Makmur dan PT Berlian Penta, often cooperate in importing sugar with state sugar factories.


Sugar price developments

Sugar is an important commodity in international market. Major sugar producers in the world include Brazil, India, the United States, West Europe, Australia, and Thailand.

Major consumers or importing countries include China, Indonesia, and svereal former Soviet republics. The prices of sugar in the world market tend to fluctuate. The prices fell to the rock bottom in 2002. Later with shortfall in supply the price scaled up to peak in 2005.

Deficit in production was recorded in three succeeding years until 2005 and growing demand from ethanol ethanol (ĕth`ənōl') or ethyl alcohol, CH3CH2OH, a colorless liquid with characteristic odor and taste; commonly called grain alcohol or simply alcohol.  industry in Brazil Brazilian Industrialization
Industrialization during colonial Times
During the colonial period, due to the rules of the economic theory of Mercantilism, no industrial activity could take place in Brazil.
 was said to be the cause of the surge in the price.

n See Food and Agriculture Organization.
 in 2004, predicted that until 2010, the price of that commodity will remain high at around US$ 17-21 per kg in international market.


Sugar price development on the domestic market

The condition in international market has strong impact on the domestic market despite government's attempt to control the price with a series of regulations. The policies are not effective enough to control the prices on the domestic market after the monopoly of Bulog was abolished in 1998.


The price of sugar at the level of farmers are often controlled by the government through a type of basic price.

Currently the basic price has been modified into a kind of minimum price guaranteed by private investors. If the price of farmers' sugar through an auction is higher than the minimum price, the excess is divided equally between the farmers and the investor.

In the milling season of 2005, the minimum price was set at Rp 3,800/kg. Meanwhile, the prices on the domestic market soared to exceed the government set price. For example, the retail price in 2005 was Rp 5,744 per kg.

Analysis of business in cane sugar industry

Construction of a sugar factory with a processing capacity of 4,000 to 10,000 tons of sugarcane per day (TCD TCD Trinity College Dublin
TCD Chad (ISO Country code)
TCD Transcranial Doppler
TCD Thermal Conductivity Detector
TCD Traffic Control Device
TCD Tropical Conservation and Development
) will cost around Rp 900 billion to Rp1 trillion with annual operating cost of Rp 45 billion--Rp 50 billion.

Construction of an ethanol factory with a production capacity of 60 kiloliters per day will cost Rp 133 billion to Rp 200 billion. Building a particle board particle board: see composition board.  factory with machines from Europe or China with a capacity of 72 square meters per hour will cost around Rp 95 billion to Rp 157 billion with operaitng cost of Rp 25 billion to Rp 34 billion a year.

Industry that also follows the growing trend is cogeneration cogeneration

In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power.
 (electricity) industry. Construciton of cogeneration plant with a capacity of 6,000 kwh, will cost Rp 45 billion with annual operating cost of Rp 9 billion.

Program to increase sugar production 1 million tons a year

In a bid to meet the target fo self sufficient in sugar supply in 2009, the government and sugar producers and consumers have drafted a plan to increase the country's sugar production by 1.3 million tons.

The additional production of 1.3 million tons is estimated based on the production capacity of the existing sugar factories, sugar plantations and sugar content.

The existing factories are expected to be able to increase production by 705,000 tons and new factories to be built will produce around 600,000 tons. In order to increase production, sugar plantations will be expanded from 409,000 hectares to 463,000 hectares or an addition of 54,000 hectares.

The expansion of plantations will include 33,000 hectares in Java and 21,000 hectares outside Java.

Investment requirement to increase productivity

Investment will be needed in the smallholder Noun 1. smallholder - a person owning or renting a smallholding
Britain, Great Britain, U.K., UK, United Kingdom, United Kingdom of Great Britain and Northern Ireland - a monarchy in northwestern Europe occupying most of the British Isles; divided into England and
 plantation, sugar factories and factories producing sugar derivatives derivatives

In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset.
 and investment by the government.

Investment in the primary business sector is made by smallhodlers and companies. Investment by smallholders are expected in Java.

Based on a survey, Java has the potential to open 41,000 hectares of new sugar plantations mainly by smallholders with a total investment of Rp 599.4 billion.

Companies are expected to open plantations outside Java. The Sampoerna Group plans to build 40,000 hectares of sugar plantations in Merauke, Papua with an investment of around Rp 426 billion bringing the total investment in the primary business sector to more than Rp 1 trillion.

Total investment needed in sugar sector is estimated to reach Rp 6.817 trillion and the bulk or Rp 6.278 trillion of which are expected to be made by the corporate sector. The largest component of the investment is for two factories outside Java (likely in Merauke) to process cane produced from 40,000 hectares of plantation to be built by the Sampoerna Group with an investment of Rp 2 trillion.

Meanwhile, investment needed for the revitalization of 52 sugar factories in Java is estimated to reach Rp 2.163 trillion. Construciton of two ethanol plants, particle board plant and electric energy plant will need additional investment of more than Rp 1 trillion.

The investment needed by smallholders mainly for pumps and tractors, transport facility and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  of seedlings will cost around Rp 538 billion.

Investment for infrastructure in roads and irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice.  systems will be made by the government and companies totaling around Rp 208 billion and Rp 200 billion respectively or a total of Rp 408 billion.

Altogether, total investment needed will reach Rp 8.25 trillion. The largest part or Rp 6.9 trillion will be contributed by companies with smallholders contirbuting Rp 1.13 trillion and the government Rp 208 billion.

Largest investment potential in Papua

The largest investment of Rp3.437 trillion is more likely in Merauke, Papua to build 40,000 hectares of sugar plantation and two new sugar plants.

Considerable amount of investment is also needed in East Java for expansion of plantations by 29,235 hectares and construction of an ethanol plant, electric energy plant and particle board plant.

Investment for ethanol plant, energy plant and particle board plant is also potential in Lampung.

In West Java and Central Java Central Java (Indonesian: Provinsi Jawa Tengah) is a province of Indonesia. The administrative capital is Semarang. It is one of the six provinces of the island of Java. Central Java is both a political entity and a cultural concept.  investment will likely needed more for plantation expansion respectively 6,801 hectares and 3,964 hectares.

New Investment

PTPN IX to restructure 4 factories

PT Perkebunan Nusantara IX(PTPN IX) plans to restructure four of its eight sugar factories in 2008. The restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics).  is expected to increase the selling value of the shares of the state company when it launches initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ) planned in 2010, its president said.

The processing capacity of the Mojor sugar factory in Sragen and the Rendeng factory Kudus, Central Java, will be expanded to 4,000 tons of cane and 2,600 tons of cane per day respectively.

The two other factories will have their old equipment replaced to be more efficient.

Investment for the capacity expansion of the two factories will be around Rp 190 billion and investment for the modernization modernization

Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family,
 of the equipment of the two other factories is around Rp 410 billion.

The state company also plans to build four units of bioethanol processing plants with a capacity of 18,000 liters per day and facility to process raw sugar into white sugar with a capacity of 400 tons per day.

PT Gunung Madu Plantations (GMP GMP (guanosine monophosphate): see guanine. ) to expand production capacity

PT Gunung Madu Plantation plans to invest Rp 200 billion this year to increase its sugar production capacity. Expansion of its factory in Gunung Batin, Central Lampung, is to be completed in 2008.

The processing capacity of the factory will be expanded to 2.2 million tons of cane a year in 2008 or equivalent to 205,500 tons of white sugar. The expansion will contribute significantly to the government's program to reach sugar self sufficiency in 2009. In 2010, the company's sugar production capacity is projected to reach 224,250 tons per year, with annual cane production of 2.4 million tons.

PT Sumatera Tonggi to build sugar plant in North Sumatra North Sumatra (Indonesian: Sumatera Utara) is a province of Indonesia. Its capital is Medan. Geography and population
The province of North Sumatra stretches across the island of Sumatra between the Indian Ocean and the Strait Malacca.

PT Sumatera Tonggi has been licensed by the Capital Investment Coordinating Board (BKPM BKPM Badan Pengawasan Pasar Modal (Indonesian investment coordinating board) ) to build a sugar plant in North Sumatra with an investment of Rp 1.2 trillion.

Construction is already in progress and it is expected to be completed and operaitonal in 2008. The factory will have an annual production capacity of 500,000 tons. The company also plans to build its own power plant to guarantee power supply for the factory. North Sumatra is known to have serious shortage of power supply.

The company plans to import raw sugar as basic material from Australia and Thailand, to produce white sugar. It production is expected to be enough to supply sugar for the nothern part of Sumatra.

Meanwhile a number of other companies such as the Astra Group, and the Sinar Mas Group Sinar Mas Group is one of the largest comglomerates in Indonesia. It was formed in 1962. It has many subsidiaries including APP.

Sinar Mas Group was founded by Eka Cipta Widjaja. Its main businesses are: Pulp and Paper, Agribusiness, Property and Financial Services.
, also plan to build new sugar factories. Astra Group and Sinar Mas group plan to build integrated sugar industry to be operational in 2009. See the following table.

Prospects and Conclusion

An increase in the productivity of sugarcane could sitll be made through improvement of cultivation system Cultivation System
 or Culture System

Revenue system in the Dutch East Indies (modern Indonesia) that forced farmers to pay revenue to The Netherlands in the form of export crops or compulsory labour.
 and expantion of plantation. The country still has ample lands suitable for sugar plantations. The country has even the potential to become a major supplier of sugar to the world market. A number of foreign sugar experts have said Indonesia has that potential.

Indonesia is one of 33 countries lying in the IOR IOR Indian Ocean Region
IOR Improved Oil Recovery
IOR Interoperable Object Reference
IOR Istituto Ortopedico Rizzoli (Rizzoli Orthopaedic Institute, Italy)
IoR Institute of Refrigeration (UK) 
 (Indian Ocean Rim), which accounts for 34% of the world's sugar production, 29% of the world's sugar consumption and 33% of the world's sugar exports.

Among the 33 countries 14 are sugar exporting countries. They are India, Pakistan, Madagascar, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , Malawi, Zimbabwe, Zambia, Sudan Sudan (sdăn`), officially Republic of Sudan, republic (2005 est. pop. 40,187,000), 967,494 sq mi (2,505,813 sq km), NE Africa. , Switzerland, Vietnam, Thailand, Mauritius, Australia, and Indonesia.

Indonesia, however, has become a major net importer of sugar. The climate in Indonesia is suitable for sugar plantation and the country is one of the richest in sugar genetic resources (germ plasm germ plasm
1. The cytoplasm of a germ cell, especially that part containing the chromosomes.

2. Germ cells as distinguished from other body cells.

3. Hereditary material; genes.
). The country, besides India, is believed to be the origin of the world's sugarcane.

According to the Indoensian Sugar Association (AGI (Artificial General Intelligence) A machine intelligence that resembles that of a human being. Considered impossible by many, most artificial intelligence (AI) research, projects and products deal with specific applications such as industrial robots, playing chess, ), an initial study shows that the country has 2 million hectares of lands suitable for sugar plantations in its eastern regions. The lands include 800,000 hectares in Papua, 816,000 hectare hectare (hĕk`târ, –tär), abbr. ha, unit of area in the metric system, equal to 10,000 sq m, or about 2.47 acres.  sin Maluku and 198,000 hectares in Central Kalimantan Central Kalimantan (Indonesian: Kalimantan Tengah often abbreviated to Kalteng) is a province of Indonesia, one of four in Kalimantan - the Indonesian part of the island of Borneo. Its provincial capital is Palangkaraya.

The province has a population of 1.

Indonesia was once the world's second largest sugar suppliers to the world second only to Cuba.

The country also has a sugar factory in Lampung ranked among the most efficient sugar factiories in the world. The fact should encourage development of sugar industry in the country.
Table - 1
Sugar plantation areas by owners,

Year                     Plantation areas Ha

        Smallholders    Government     Private       Total

1999      176,733         82,106        83,372       342,211
2000      171,279         64,133       105,248       340,660
2001      178,887         87,687        77,867       344,441
2002      196,509         79,975        74,238       350,722
2003      172,015         87,251        76,459       335,725
2004      184,283         78,205        82,305       344,793
2005      252,427         80,383        89,924       422,734
2006      262,093         80,593        90,636       433,322

Source: Agriculture Ministry

Table - 2
Sugar content of cane in Indonesia,
2000 - 2006

Year     Content

2000       7.04
2001       5.85
2002       6.88
2003       7.21
2004       7.57
2005       7.65
2006      17.60

Source: Agriculture Ministry

Table - 3
Sugar factories, milling capacity, processing system
and operating start up

No.  Companies / Sugar   Milling    Start   Processing     Milling
     factories           capacity   -up     systems        start


1.   1. PG Kuala Madu     4,000     1982    Treatment      Jan/Feb
                                            with sulfite
2.   2. PG Sei            4,000     1983    Treatment      Jan/Feb
        Semayang                            with sulfite
     Subtotal            18,000


3.   1. PG Bunga          6,000     1984    Treatment      Apr/May
        Mayang                              with sulfite
4.   2. PG Cinta Manis    5,000     1984    Treatment      Apr/May
                                            with sulfite
     Subtotal            11,000


5.   1. PG Jatibarang     2,050     1842    Treatment      May/June
                                            with sulfite
6.   2. PG Pangka         1,830     1836    Treatment      May/June
                                            with sulfite
7.   3. PG Sourceharjo    2,050     1861    Treatment      May/June
                                            with sulfite
8.   4. PG Sragi          3,700     1836    Treatment      May/June
                                            with sulfite
9.   5. PG Rendeng        2,850     1840    Treatment      May/June
                                            with sulfite
10.  6. PG Gondang        1,620     1860    Carboni-       May/June
        Baru                                zation
11.  7. PG Tasikmadu      3,650     1874    Carboni-       Ma /June
12.  8. PG Mojosragen     2,950     1883    Treatment      May/June
                                            with sulfite
     Subtotal            20,700


13.  1. PG Lestari        3,750     1909    Treatment      June
                                            with sulfite
14.  2. PG Mrican         2,750     1939    Treatment      June
                                            with sulfite
15.  3. PG Pesantren      5,250     1976    Treatment      June
        Baru                                with sulfite
16.  4. PG Ngadirejo      5,250     1912    Treatment      June
                                            with sulfite
17.  5. PG Mojo           2,250     1882    Treatment      June
        panggung                            with sulfite
18.  6. PG Watutulis      2,000     1839    Treatment      June
                                            with sulfite
19.  7. PG Tulagan        1,250     1848    Treatment      June
                                            with sulfite
20.  8. PG Kremboong      1,350     1847    Treatment      June
                                            with sulfite
21.  9. PG Gempolkrep     5,250     1912    Treatment      June
                                            with sulfite
22.  10. PG Jombang       2,000     1895    Treatment      June
         Baru                               with sulfite
23.  11. PG Cukir         2,750     1884    Treatment      June
     Subtotal            33,850             with sulfite


24.  1. PG Sudhono        2,200     1888    Treatment      May/June
                                            with sulfite
25.  2. PG Purwodadi      2,000     1832    Carboni-       Ma /June
26.  3. PG Rejosari       2,000     1890    Treatment      May/June
                                            with sulfite
27.  4. PG Pagottan       2,300      -      Treatment      May/June
                                            with sulfite
28.  5. PG Kanigoro       1,650     1894    Treatment      June
                                            with sulfite
29.  6. PG Kedawung       3,000     1898    Treatment      June
                                            with sulfite
30.  7. PG Wonolangan     1,250     1832    Treatment      June
                                            with sulfite
31.  8. PG Gending        1,300     1830    Treatment      June
                                            with sulfite
32.  9. PG Pajarakan      1,200     1885    Treatment      June
                                            with sulfite
33.  10. PG Jatiroto      7,000     1905    Treatment      June
                                            with sulfite
34.  11. PG Semboro       4,800     1938    DNKS           June
35.  12. PG Wringin       1,100     1881    Treatment      June
         Anom                               with sulfite
36.  13. PG Olean         1,000     1846    SISJ           June
37.  14. PG Panji         1,800     1886    Treatment      June
                                            with sulfite
38.  15. PG Asembagus     2,400     1891    Treatment      June
                                            with sulfite
39.  16. PG Prajekan      2,450     1883    Treatment      June
                                            with sulfite
     Subtotal            37,450


40.  1. PG Takalar        3,000     1987    Treatment      Jul/Aug.
                                            with sulfite
41.  2. PG Bone           2,000     1975    Treatment      Jul/Aug.
                                            with sulfite
42.  3. PG Caming         3,000     1986    Treatment      Jul/Aug.
                                            with sulfite
     Subtotal             8,000



43.  1. PG Krebet         3,000     1906    Treatment      June
        Baru I                              with sulfite
44.  2. PG Krebet         4,000     1976    Treatment      June
        Baru II                             with sulfite
45.  3. PG Rejo Agung     4,500     1894    Carboni-       June
        Baru                                zation
46.  4. PG Candi          2,000     1832    Treatment      June
                                            with sulfite
     Subtotal            13,500


47.  1. PG Madukismo      3,500     1955    Treatment      May/June
                                            with sulfite

48.  1. PG Sindanglaut    2,000     1896    Treatment      May/June
                                            with sulfite
49.  2. PG Karang         1,400     1859    Treatment      May/June
        suwung                              with sulfite
50.  3. PG Tersana        3,500     1896    Treatment      May
        Baru                                with sulfite
51.  4. PG Jatitujuh      4,000     1975    Treatment      May
                                            with sulfite
52.  5. PG Sindanglaut    3,500     1981    Treatment      May
                                            with sulfite
     Subtotal            14,400


53.  1. PG Tolangohulo    8,000     1988    Treatment      August
                                            with sulfite

VII. PT RNI GROUP        39,400


54.  1. PG Kebon Agung    5,000     1905    Treatment      May/June
                                            with sulfite
55.  2. PG Trangkil       3,000     1835    Treatment      May/June
                                            with sulfite
     Subtotal             8,000


56.  1. PG Gunung Madu   12,000     1975    Treatment      Apr/Car
                                            with sulfite   boni


57.  1. PG Gula Putih    10,000     1983    Treatment      Apr/May
        Mataram                             with sulfite
58.  2. PG Sweet Indo     9,000     1995    Treatment      Apr/May
        Lam un                              with sulfite
59.  3. PG Indo Lam-      8,000     1996    Treatment      Apr/May
        pung Perkasa                        with sulfite
     Subtotal            127,000

Source: AGI

Table - 4
Indonesia's sugar production, 1994 - 2006

Year       Production           Growth
             (tons)               (%)

1994        2,453,881              -
1995        2,059,576           -16.06
1996        2,094,195             1.68
1997        2,191,986             4.66
1998        1,488,269           -32.10
1999        1,493,933             0.38
2000        1,690,004            13.12
2001        1,725,467             2.09
2002        1,755,433             1.73
2003        1,631,615            -7.05
2004        2,051,643            25.74
2005        2,241,742             9.26
2006        2,314,712             3.25

Source: Indonesian Sugar Council

Table - 5
Sugar production by companies,
2002 - 2006


Year                       2002          2003

PG Rajawali II PT,       96,500        84,626
Jawa Barat
PTPN IX,                 89,606       121,953
Jawa Tengah
PTPN X, Jawa            340,156       287,088
PTPN XI, Jawa           358,562       320,599
Kebon Agung, PT,         73,413        79,835
Madu Baru, PT            35,706        24,681
Rajawali I, PT           99,087       106,698
Subtotal              1,093,030     1,024,481

Outside Java
PTPN II,                 52,226        26,786
North Sumatra
PTPN VII, Lampung        84,080       100,532
PTPN XIV,                34,646        29,161
South Sulawesi
PG Rajawali III,         27,263        34,937
Gunung Madu             147,287       151,737
Plantation, PT
Gula Putih              108,872        93,230
Mataram, PT
Sweet Indo              100,360        71,015
Lampung, PT
Indo Lampung            107,669        99,736
Perkasa, PT
Subtotal                662,403       607,134
Total                 1,755,433     1,631,615

Year                       2004          2005          2006

PG Rajawali II PT,      114,222       130.000       140,922
Jawa Barat
PTPN IX,                135,602       148.000       170,869
Jawa Tengah
PTPN X, Jawa            350,358       387.000       410,905
PTPN XI, Jawa           363,760       390.000       415,292
Kebon Agung, PT,         91,847       110.000       122,066
Madu Baru, PT            23,690        27.000        31,500
Rajawali I, PT          126,694       137.917       145,655
Subtotal              1,206,173                   1,456,554

Outside Java
PTPN II,                 13,456        42.000        70,465
North Sumatra
PTPN VII, Lampung       134,933       165.000       174,487
PTPN XIV,                27,614        32.000        36,292
South Sulawesi
PG Rajawali III,        185,644        30.000        47,085
Gunung Madu             151,294       185.000       197,000
Plantation, PT
Gula Putih               37,970        60.000        91,886
Mataram, PT
Sweet Indo              148,652                     120,470
Lampung, PT
Indo Lampung            145,908                     120,472
Perkasa, PT
Subtotal                845,470                     975,329
Total                 2,051,643     2,241,742     2,314,712

Source: AGI

Table - 6
Imports of refined sugar,

Year                    Sugar

           Volume Tons      Value (US$ 000)

2002          970,926           198,638
2003          997,204           215,777
2004        1,119,790           262,813
2005        1,980,487           585,263
2006        1,543,284           589,876

Source: BPS, Plantation Directorate General of Agriculture Ministry

Table - 7
Imports of sugar, 2007

Type                        Import quota    Realization      (%)

White sugar                      450,000        448,681     99.71
Double refined sugar             552,650        269,222     48
Raw sugar for
*  White sugar                   292,563         97,441     33.31
*  Double refined sugar        1,419,700        510,113     35
*  MSG industry                  194,500         56,900     29
Subtotal                       1,906,763        664,454     34.5
Total                          2,909,413      1,382,357     47.5

Source: Various official sources

Table - 7
Exports of sugar,
2002 - 2006

Year              Sugar
           Volume        Value
           (tons)      (US$ 000)

2002           816           503
2003           695           561
2004         9,933         1,922
2005         1,173           602
2006         1,480           982

Source: BPS, Plantation Directorate General

Table - 8
Government's policies on sugar industry

 SK/Keppres/Kepmen             on                     Goals

Presidential decree      Sugar procurement,       To keep price
No, 43/1971, 14 July     distribution, and        stability of the
1971                     marketing                essential product

Letter of minister/      Controlling,             Details about
state secretary No,      supervision and          Oresidential decree
B, 136/ABN               distribution of          No, 43/1971 covering
SEKNEG/3/74, 27          refined sugar            state company sugar
March 1974               produced by non state

Presidential             Sugar intensification    To increase in sugar
Instruction No,          (TRI)                    production and income
9/1975, 22 April 1975                             of farmers

Decision of trade and    Sugar domestic trade     To guarantee
cooperative minister                              procurement and
No, 122/Kp/III/81, 12                             distribution of sugar
March 1981                                        and increase in
                                                  income of farmers

Decision of finance      Determination of         To guarantee price
minister No. 342/KMK,    price of domestic and    stability, foreign
011/1987                 imported products of     exchange and
                         refined sugar            adjustment of
                                                  farmers' and factory

Law No, 12/1992          Plant cultivation        To give freedom for
                                                  farmers to grow crops
                                                  with good market

Presidential             Program to develop       Providing role for
Instruction No.          smallholders sugar       business players in
5/1997, 29 December      plantations              free trade

Presidential             Termination of           Freedom for farmers
Instruction No.          implementation of        to select crop in
5/1998, 21 January       Pres. Instruction No,    line with the law No,
1998                     5/1997                   12/1992

Decision of trade        Commodities of           Improving efficiency
min. No,                 which imports are        and distribution of
25/MPP/Kep/1/1998        regulated                goods

Decision of forestry     Determination of         To prevent losses to
and plantation min.      price of farmers'        farmers and boost
No. 282/Kpts-IX/1999,    share of sugar           production
7 May 1999               production

Decision of trade        Import regulation        Reducing government's
minister No,                                      budget through
363/MPP/Kep/8/1999,                               imports by sugar
'5 August 1999                                    producers

Decision of the trade    Revoking decision of     Abolition of import
min. No. 230/MPP/        the trade min. No.       duty on sugar to
Kep/6/1999, 5 June       363/MPP/Kep/8/1999       protect domestic
1999                                              industry

Decision of finance      Change in import         Improvement of
minister No,             duty                     effectiveness of
324/KMK,01/2002                                   import duties

Decision of trade        Sugar import             Import restriction by
minister No.             Regulation               allowing only
643/MPP/Kep/9/2002,                               producers and
'23 September 2002                                registered importers
                                                  to import that

Decision of the trade    Improvement of           Registered importers
min. No.                 sugar import             required to forer-
527/MPP/Kep/9/2004       regulation               stall the market and
                                                  imports allowed only
                                                  when the price is no
                                                  less than Rp 3,410/kg

Source: Agriculture ministry, industry ministry

Table - 9
Production, share and production growth recorded
by main producers, 2004-2006

                     Production (000 tons)

Countries       2003/04       2004/05       2005/06

Brazil           26,400        28,175        28,700
Union (EU)       17,132        21,825        21,233
India            15,150        14,210        18,430
China            10,734         9,826        10,500
USA               7,847         7,146         6,824
Thailand          7,010         5,187         4,330
Mexico            5,330         6,149         6,000
Australia         5,178         5,388         5,200
Pakistan          4,047         2,937         2,890
Cuba              2,300         2,100         2,300
World            14,100       142,500       147,800

                Share             Growth (%)
                             2003/04-      2004/05-
Countries        (%)         2004/05       2005/06

Brazil            19.42           6.7           1.9
Union (EU)        14.37          27.4          -2.7
India             12.47          -6.2          29.7
China              7.10          -8.5           6.9
USA                4.62          -8.9          -4.5
Thailand           2.93         -26.0         -16.5
Mexico             4.06          15.4          -2.4
Australia          3.52           4.1          -3.5
Pakistan           1.96         -27.4          -1.6
Cuba               1.56          -8.7           9.5
World            100.00           1.0           3.7

Source: USDA

Table - 10
Sugar consumption, share and growth in
major consuming countries, 2004 - 2006

Countries            Production (000 tons)

                2003/04       2004/05       2005/06

India            18,810        19,500        19,800
EU               14,358        17,626        17,525
China            11,600        11,600        11,700
Brazil           10,400        10,600        10,800
USA               8,971         9,269         9,267
Russia            6,100         6,300         6,450
Mexico            5,600         5,424         5,482
Pakistan          3,600         3,750         3,850
Indonesia         3,400         3,550         3,800
Japan             2,247         2,263         2,250
World           143,300       145,100       148,000

Countries        Share            Growth (%)
                            2003/04-      2004/05-
                  (%)       2004/05       2005/06

India             13.38           3.7           1.5
EU                11.84          22.8          -0.6
China              7.91           0.0           0.9
Brazil             7.30           1.9           1.9
USA                6.26           3.3           0.0
Russia             4.36           3.3           2.4
Mexico             3.70          -0.3           1.1
Pakistan           2.60           4.2           2.7
Indonesia          2.57           4.4           7.0
Japan              1.52           0.7          -0.6
World            100              1.3           2.0

Source: USDA

Table - 11
Policy in sugar industry  in several countries

 Countries          Basic policies              Policy essence

Brazil           Domestic/price Support      Price support (1998)
                 (US$ 743 million/year)

India            Essential Commodities
                 ACT 1,955

                 Production                  Allocation and produciton
                                             control i (levy sugar)

                 Distribution                Priceds within reach of
                                             consumers (ration card)

                 Partial Price Control       Cane and sugar price
                                             guarantee (levy price and
                                             market price)

Thailand         Price support               Price support

                 Production management       Production control/quota

Japan            Price guarantee (Y 71

                 High import duty            Restricting imports

West Europe      CAP

                 Price support               Price guarantee

                 Production                  Production control/quota

                 TRQ                         Import control

                 Safe guards Mechanism       Import control

                 Export Subsidy              Reducing offer on
                                             domestic market

United States    2002 Farm Act and FAIR
                 ACT of 1996 (US$ 1.9

                 Price Support               Price guarantee & credit

                 Tariff-Rate Quota           Import control

                 Export Subsidy

                 Re-export program           Compensation for industry
                                             using sugar basic

                 Payment-in-Kind             Reducing distortion in

Source: Agriculture Ministry, Industry Ministry

Table - 12
Market size  of sugar, 2002 - 2006

Year    Production       Imports       Exports
          (Tons)         (Tons)         (Tons)

2002     1,755,433        970,926         816
2003     1,631,615        997,204         695
2004     2,051,643      1,119,790       9,933
2005     2,241,742      1,980,487       1,173
2006     2,314,712      1,543,284       1,480

Year            Market size
          (Tons)       * (US$ 000)

2002     2,725,543      1,678,934
2003     2,628,124      2,120,896
2004     3,161,500      2,213,050
2005     4,221,056      2,165,402
2006     3,856,516      2,556,870

Source: Industry  ministry

* equivalent to export price

Table - 13
Estimate of consumption  by sectors, 2006

                                             (000 tons)

Description                                    2006

Direct consumption by household/ people       2,695,705
Consumption by industry
--Food and beverage industry                    898,568
--Other industry                                262,243
Consumption by industrial sector              1,160,811
Total consumption of sugar                    3,856,516

Source: Data Consult

Table - 14
Average retail prices of sugar in Indonesia

Year     Sugar prices on the average

2000                           3,027
2001                           3,822
2002                           3,636
2003                           4,319
2004                           4,243
2005                           5,744
2006                           5,975

Source: Agriculture Ministry

Table - 15
Analysis  of several cane-based industries

Industries            Capacity                 Cost (Rp billion)
                                          Investment    Operating cost

Sugar plant           4,000-10,000 TCD    900 - 1000       45 - 50

Ethanol               60 kl/day           133 - 200           39

Particle Board (Ex    72 m3 per hour       95 - 157        25 - 34
Europe or China)

Cogeneration          6,000 kWh               45              9

Source: Agriculture ministry

Table - 16
Targets for expansion of plantation, increase in production
and productivity, 2007-2009

    Description              Java          Outside       Indonesia
Harvest area (Ha)
Year2007                    264,532        144,353        408,885
Year2009                    297,754        165,097        462,851

Cane milled (Tons)
Year2007                 20,250,182     10,060,359     30,310,541
Year2009                 25,103,950     12,072,886     37,176,836
Addition                  4,853,768      2,012,527      6,866,295

Plantation productivity
(Tons of cane /Ha)
Year2007                       76.6           69.7           74.1
Year2009                       84.4           73.1           80.3
Addition                        7.8            3.4            6.2

Sugar content (%)
Year2007                       7.53           8.25           7.77
Year2009                       8.31           8.44           8.23
Addition                       0.60           0.19           0.46

Crystal production (Tons)
Year2007                  1,524,479        830,375      2,354,854
Year2009                  2,040,849      1,019,281      3,060,130
Addition                    516,370        188,906        705,276

Crystal productivity (Tons/Ha)
Year2007                       5.76           5.75           5.76
Year2009                       6.85           6.17           0.85
Addition                       1.09           0.42           0.85

Source: Agriculture Ministry

Table - 17
Estimate of investment needed in Java and Papua,
2005 - 2010

     Sectors           Small-
                      holders     Companies    Government    Total
                         1)          2)           2)

                      (Rp billion)

1. Business investment

a. Land                  205.0        200.0          0.0
b. Farm equipment          6.6          6.4          0.0
c. Buildings               0.0        100.0          0.0
d. Working capital       387.9        120.0          0.0
Total                    599.4        426.4          0.0       1,026

2. Investment in
   business areas

2.1 Business in
    farm equipment
a. Pumps                  41.5        40,5          0,0           82
b. Tractors              150.3       146,7          0,0          297
2.2 Breeding of           61.5        60,0          0,0        121,5
2.3 Post harvest         284.7       277,8          0,0        562,5
2.4 Processing
a. New sugar               0.0     2,000,0          0,0        2,000
   (2 units)
b. Rehabiliation           0.0     2,163,7          0,0      2,163,7
   of factories
   (52 units)
c. Ethanol plant           0.0       500,0          0,0          500
d. Electric Energy         0.0       500,0          0,0          500
e. Particle Board          0.0       200,0          0,0          200
2.5. Marketing and

Source: Agriculture ministry

Table - 18
Investment needed in sugar industry, 2005-2010

Province            By          By companies        By         Total
                smallholders                    government

                                     (Rp billion)

East Java             831,4         2,259,4           0,0     3,090,8
Central Java          193,4           445,8           0,0       639,2
West Java             112,7           292,4           0,0       405,2
Papua                   0,0         3,229,4         208,0     3,437,4
Lampung                 0,0           678,0           0,0       678,0
TOTAL               1,137.5         6,905           208       8,250.6

Table - 19
Expansion and new investment in sugar industry

Companies          Planned          Cane
                  investment      processing
                 (RP billion)      capacity

PTP IX                    410    2,800 tons

PT Gunung                 200    2.2 million tons
Madu                             cane/year

PT Sumatera             1,200    500,000 tons
Tonsggi                          sugar/year
                                 (prod. cap.)

Group Sinar               700    7,000 tons/day

Astra Agro              1,000    10,000 tons/day

                 Locations        Construction/

PTP IX        Sragen &           Construction to
              Kudus, Central     start in 2008

PT Gunung     Central Lampung    Operational in
Madu                             2008

PT Sumatera   North Sumatra      Operational in
Tonsggi                          2008

Group Sinar   Sinjai, South      Operational
Mas           Sulawesi           in 2009

Astra Agro    Goa and            Operational
Lestari       Takalar, South     in 2009

Source: Investment Coordinating Board
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Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Sep 1, 2007
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