Indonesia’s Time to Become King of the Sugar Industry

By Cyrillus Harinowo, Independent Commissioner of Bank Central Indonesia

THE TRAVEL to Merauke, that morning, went smoothly and pleasantly. This was my first time traveling to Merauke. A very interesting sight appeared as our plane approached Merauke. The scenery was not as scary as we had imagined.

The vast land seemed to be accentuated by the sea and large, winding rivers, resulting in beautiful scenery. There was also a lot of land cultivated by transmigrants from Java who have been in the area for decades.

No sooner had our plane touched down on the tarmac than we were on our way more than 50 kilometers to the area that was to be developed into a sugarcane plantation. It was also a surprise that the highway we traveled to the sugarcane fields was relatively good and smooth. It turns out that the massive infrastructure development under President Jokowi has really touched peripheral areas like Merauke.

Arriving at our destination, the tall sugarcane plants greeted us. The plants grow in fertile mineral soil that allows sugarcane to grow and develop well. Sugarcane trees that were more than 4 meters high were lined up and crowded on the land we visited. The sugarcane is planted very regularly in large areas. Today, thousands of hectares of land are planted with sugarcane.

Arriving at our destination, tall sugarcane plants greeted us. The plants grow in fertile mineral soil that allows sugarcane to grow and develop well. Sugarcane trees that were more than 4 meters high were lined up and crowded on the land we visited. The sugarcane is planted very regularly in large areas. Today, thousands of hectares of land are planted with sugarcane.

The sugarcane crop, which initially started with seedlings imported from Australia and transported several times by airplane, finally began to be developed on its own after the seedlings from Australia began to grow tall and were ready for further development. Sugarcane seedlings from the Gunung Madu Plantation sugarcane plantation from Lampung were also planted in the garden.

Each tree can eventually become 10 seedlings and this is what makes the land for sugar cane plants then expanded. The land already planted with sugarcane was developed by PT Global Papua Abadi (GPA), in which well-known palm oil entrepreneurs Martua Sitorus and Martias are major shareholders.

The sugarcane plantation was developed using highly automated technology. Land clearing is done using a number of heavy equipment that quickly performs the task of preparing the land. Likewise, further land preparation and planting of seedlings is done with the help of machine power.

At harvest time, they will also prepare a harvester that they will bring in from Brazil. This means that the existing workforce must be intensively trained to use the various equipment so that the large investment can be fully utilized. Thus, the opening up of the sugarcane industry will eventually lead to the development of a trained workforce capable of using the machinery developed there.

What they are also seriously preparing for is the handling of pests, which are quite prevalent in the area. Thus, it can be expected that the sugarcane plantation that is built will produce sugarcane with a high enough yield. To date, the sugarcane plants they have developed have produced good harvest prospects, with productivity approaching 100 tons per hectare and with a yield of around 10 percent.

Indonesia’s Time to Become King of the Sugar Industry

By Cyrillus Harinowo, Independent Commissioner of Bank Central Indonesia

THE TRAVEL to Merauke, that morning, went smoothly and pleasantly. This was my first time traveling to Merauke. A very interesting sight appeared as our plane approached Merauke. The scenery was not as scary as we had imagined.

The vast land seemed to be accentuated by the sea and large, winding rivers, resulting in beautiful scenery. There was also a lot of land cultivated by transmigrants from Java who have been in the area for decades.

No sooner had our plane touched down on the tarmac than we were on our way more than 50 kilometers to the area that was to be developed into a sugarcane plantation. It was also a surprise that the highway we traveled to the sugarcane fields was relatively good and smooth. It turns out that the massive infrastructure development under President Jokowi has really touched peripheral areas like Merauke.

Arriving at our destination, the tall sugarcane plants greeted us. The plants grow in fertile mineral soil that allows sugarcane to grow and develop well. Sugarcane trees that were more than 4 meters high were lined up and crowded on the land we visited. The sugarcane is planted very regularly in large areas. Today, thousands of hectares of land are planted with sugarcane.

Arriving at our destination, tall sugarcane plants greeted us. The plants grow in fertile mineral soil that allows sugarcane to grow and develop well. Sugarcane trees that were more than 4 meters high were lined up and crowded on the land we visited. The sugarcane is planted very regularly in large areas. Today, thousands of hectares of land are planted with sugarcane.

The sugarcane crop, which initially started with seedlings imported from Australia and transported several times by airplane, finally began to be developed on its own after the seedlings from Australia began to grow tall and were ready for further development. Sugarcane seedlings from the Gunung Madu Plantation sugarcane plantation from Lampung were also planted in the garden.

Each tree can eventually become 10 seedlings and this is what makes the land for sugar cane plants then expanded. The land already planted with sugarcane was developed by PT Global Papua Abadi (GPA), in which well-known palm oil entrepreneurs Martua Sitorus and Martias are major shareholders.

The sugarcane plantation was developed using highly automated technology. Land clearing is done using a number of heavy equipment that quickly performs the task of preparing the land. Likewise, further land preparation and planting of seedlings is done with the help of machine power.

At harvest time, they will also prepare a harvester that they will bring in from Brazil. This means that the existing workforce must be intensively trained to use the various equipment so that the large investment can be fully utilized. Thus, the opening up of the sugarcane industry will eventually lead to the development of a trained workforce capable of using the machinery developed there.

What they are also seriously preparing for is the handling of pests, which are quite prevalent in the area. Thus, it can be expected that the sugarcane plantation that is built will produce sugarcane with a high enough yield. To date, the sugarcane plants they have developed have produced good harvest prospects, with productivity approaching 100 tons per hectare and with a yield of around 10 percent.

Indonesia once experienced the heyday of sugarcane plantations during the Dutch colonial era. Sugarcane was planted in Java, especially in Central Java, the Special Region of Yogyakarta, and in East Java, with sugarcane factories flourishing everywhere. However, with the takeover of the sugarcane plantations by foreigners and the private sector, its development began to slow down.

Moreover, farmers rarely use new seeds. The sugarcane crop in Indonesia itself is the result of seedlings from old trees. Farmers even use the same seedlings for more than 10 harvests.

The slow development of sugarcane plantations in Indonesia has led to a huge deficit in the sugar industry. Demand from the public and industry was recorded to be huge, while Indonesia’s sugar industry did not experience significant development.

The development of large-scale sugarcane plantations was finally carried out in Lampung by several entrepreneurs. The 1998 monetary crisis caused several changes in the ownership of companies in the Lampung area. The sugar industry that had developed in Lampung Province became an industry that experienced quite good profits.

Development also occurred in Java but on a relatively smaller scale. The sugar factories that were built, such as in Pekalongan (a refurbishment of an existing sugar factory), and sugar factories in Blora and Lamongan, could not help the already declining situation.

Seeing the widening sugar deficit in the country, the government eventually encouraged the development of a new sugarcane plantation industry complemented by a sugar industry and even an ethanol industry.

Muria Sumba Manis Company on Sumba Island

One of the companies that pioneered the development of the sugarcane plantation industry is the Djarum Kudus Group. The business group has expanded its wings into the plantation sector by developing the palm oil industry, especially in West Kalimantan Province. The development of oil palm plantations is carried out very seriously by the company and even its palm oil processing industry (PKS). One of the palm oil mills that I have visited is near Sungai Pinyuh, West Kalimantan, which was built using the concept of “zero waste”.

The plantation company (Hartono Plantation Indonesia, which is one of the companies in the Djarum Group) later expanded into the sugar industry after acquiring a 26,000-hectare land concession on Sumba Island. The island has a similar climate to that in Northern Australia, making it suitable for sugarcane plantations.

Unfortunately, the land has a thick layer of rock, so efforts to develop the land are carried out by massively destroying the rock layer. Stone crushers were brought in from overseas, from standard to highly sophisticated, to the area to overcome this natural challenge. The crushed rock eventually became the medium for sugarcane cultivation.

The lack of available water resources also prompted the company to build tens or even hundreds of reservoirs for water conservation. From these reservoirs, water is systematically channeled using a network of hoses planted underground using a system called the “sub dripping system” developed by the agricultural industry in Israel.

The sugarcane plantation is a very modern sugarcane plantation with a level of sugarcane productivity that is continuously strived to be improved. Meanwhile, the yield at the company is now able to reach more than 10%, giving the company better prospects. 

The Beginning of the (Re)Rise of the National Sugar Industry

The development of the sugarcane plantation industry in Indonesia eventually experienced ups and downs with various steps taken by many Indonesian entrepreneurs. The development of sugarcane plantations carried out by two palm oil entrepreneurs in the form of PT Global Papua Abadi then gained new momentum with the establishment of PT MNM (Murni Nusantara Mandiri). The first planting of sugarcane in the plantation was done by the company when we visited their plantation.

The sugarcane plantation to be developed by PT MNM has the same pattern as that developed by the previous company, PT GPA, which was greatly assisted by the presence of experts from Australia. I also greatly admire the presence of Indonesian management who have worked hard in the pioneering efforts to develop the sugarcane plantation. The seriousness of the founders and management of the company convinced me that this was the beginning of the revival of the national sugar industry. It is truly beginning.

If the sugarcane plantation industry and the sugar industry that has traditionally taken root in Java and Sumatra can be revived, while the pioneering steps taken by the Djarum Group, the KPN Group (from Martua Sitorus) and the Martias group of companies can continue to be encouraged, then eventually the potential of the sugarcane plantation industry and the sugar industry in Indonesia will indeed experience a revival.

The success of their move will surely be followed by other groups that are familiar with the development of large-scale agricultural industries so that in the end there will be a snowballing effect that continues to grow. If Indonesia can become the king of the global palm oil industry, then the possibility of Indonesia becoming the king of the global sugar industry should not be dismissed. It seems we can expect that to happen in the next few decades. (*)

The Journey of Indonesian Sugarcane Plantations

Indonesia once experienced the heyday of sugarcane plantations during the Dutch colonial era. Sugarcane was planted in Java, especially in Central Java, the Special Region of Yogyakarta, and in East Java, with sugarcane factories flourishing everywhere. However, with the takeover of the sugarcane plantations by foreigners and the private sector, its development began to slow down.

Moreover, farmers rarely use new seeds. The sugarcane crop in Indonesia itself is the result of seedlings from old trees. Farmers even use the same seedlings for more than 10 harvests.

The slow development of sugarcane plantations in Indonesia has led to a huge deficit in the sugar industry. Demand from the public and industry was recorded to be huge, while Indonesia’s sugar industry did not experience significant development.

The development of large-scale sugarcane plantations was finally carried out in Lampung by several entrepreneurs. The 1998 monetary crisis caused several changes in the ownership of companies in the Lampung area. The sugar industry that had developed in Lampung Province became an industry that experienced quite good profits.

Development also occurred in Java but on a relatively smaller scale. The sugar factories that were built, such as in Pekalongan (a refurbishment of an existing sugar factory), and sugar factories in Blora and Lamongan, could not help the already declining situation.

Seeing the widening sugar deficit in the country, the government eventually encouraged the development of a new sugarcane plantation industry complemented by a sugar industry and even an ethanol industry.

Muria Sumba Manis Company on Sumba Island

One of the companies that pioneered the development of the sugarcane plantation industry is the Djarum Kudus Group. The business group has expanded its wings into the plantation sector by developing the palm oil industry, especially in West Kalimantan Province. The development of oil palm plantations is carried out very seriously by the company and even its palm oil processing industry (PKS). One of the palm oil mills that I have visited is near Sungai Pinyuh, West Kalimantan, which was built using the concept of “zero waste”.

The plantation company (Hartono Plantation Indonesia, which is one of the companies in the Djarum Group) later expanded into the sugar industry after acquiring a 26,000-hectare land concession on Sumba Island. The island has a similar climate to that in Northern Australia, making it suitable for sugarcane plantations.

Unfortunately, the land has a thick layer of rock, so efforts to develop the land are carried out by massively destroying the rock layer. Stone crushers were brought in from overseas, from standard to highly sophisticated, to the area to overcome this natural challenge. The crushed rock eventually became the medium for sugarcane cultivation.

The lack of available water resources also prompted the company to build tens or even hundreds of reservoirs for water conservation. From these reservoirs, water is systematically channeled using a network of hoses planted underground using a system called the “sub dripping system” developed by the agricultural industry in Israel.

The sugarcane plantation is a very modern sugarcane plantation with a level of sugarcane productivity that is continuously strived to be improved. Meanwhile, the yield at the company is now able to reach more than 10%, giving the company better prospects. 

The Beginning of the (Re)Rise of the National Sugar Industry

The development of the sugarcane plantation industry in Indonesia eventually experienced ups and downs with various steps taken by many Indonesian entrepreneurs. The development of sugarcane plantations carried out by two palm oil entrepreneurs in the form of PT Global Papua Abadi then gained new momentum with the establishment of PT MNM (Murni Nusantara Mandiri). The first planting of sugarcane in the plantation was done by the company when we visited their plantation.

The sugarcane plantation to be developed by PT MNM has the same pattern as that developed by the previous company, PT GPA, which was greatly assisted by the presence of experts from Australia. I also greatly admire the presence of Indonesian management who have worked hard in the pioneering efforts to develop the sugarcane plantation. The seriousness of the founders and management of the company convinced me that this was the beginning of the revival of the national sugar industry. It is truly beginning.

If the sugarcane plantation industry and the sugar industry that has traditionally taken root in Java and Sumatra can be revived, while the pioneering steps taken by the Djarum Group, the KPN Group (from Martua Sitorus) and the Martias group of companies can continue to be encouraged, then eventually the potential of the sugarcane plantation industry and the sugar industry in Indonesia will indeed experience a revival.

The success of their move will surely be followed by other groups that are familiar with the development of large-scale agricultural industries so that in the end there will be a snowballing effect that continues to grow. If Indonesia can become the king of the global palm oil industry, then the possibility of Indonesia becoming the king of the global sugar industry should not be dismissed. It seems we can expect that to happen in the next few decades. (*)