Sugar Tech (Nov-Dec 2016) 18(6):636–641
DOI 10.1007/s12355-016-0490-6
REVIEW ARTICLE
An Overview of Sugar Sector in Indonesia
Aris Toharisman1 • Triantarti2
Received: 4 October 2016 / Accepted: 15 October 2016 / Published online: 4 November 2016
 Society for Sugar Research & Promotion 2016
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 pro-
ductivity. 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 con-
sumption 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 pri-
vate sector to invest in the sector. Besides, the government
also plans to revitalize existing sugar units, expand cane
& Triantarti
triantarti@gmail.com
Aris Toharisman
atoharis@yahoo.com
1
PTPN XI, Jl. Merak 1, Surabaya 60175, East Java, Indonesia
2
Indonesian Sugar Research Institute, Jl. Pahlawan 25,
Pasuruan 67126, East Java, Indonesia
123
area and setup a few new sugar units in collaboration with
the private sector to realize the plan of self-sufficiency.
Keywords Indonesia
Sugarcane
CCS
Sugar industry

Diversification
Introduction
Indonesia is the world’s fourth most populous countries
after China, India and the USA. Its sugar demand is almost
5.7 million tonnes, and 52% of the sugar is imported from
other countries such as Thailand, India, Brazil and Aus-
tralia. Annual growth of sugar consumption has averaged
4.3%, as against the world’s average growth rate of 2.3%.
The gap between domestic output and demand of sugar
increased gradually, and now Indonesia is becoming one of
the biggest sugar net-importers. The dependence on large
quantity of imported sugar has to be minimized as sugar
has been categorized as strategically essential commodity.
Currently, it is endeavor of government to provide enough
supply of sugar at reasonable price. Although sugar
industry in Indonesia has existed since the Dutch colonial
period, the fate of the Indonesian sugar industry is not as
sweet as its product. Many issues continue to plague the
national sugar industry, ranging from aging factories,
reduced sugarcane fields, farm inefficiency, lack of good
varieties, climatic vagaries and low productivity to a flood
of cheap imported sugar due to poor market regulation
(Toharisman et al. 2013). 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 sec-
tor. This is in addition to the anticipated demand from
Sugar Tech (Nov-Dec 2016) 18(6):636–641
biofuel producers due to regulations regarding mandatory
biofuel requirements as Indonesia seeks to reduce its reli-
ance on fossil fuels.
The sugar factories in Indonesia are grouped into two:
plantation white sugar factories (PW-SF) and refinery sugar
factories (R-SF). The PW-SF produces white sugar from
sugarcane as a raw material. Plantation white sugar (PWS)
product is normally used by household consumers.
Approximately 56% of sugarcane is supplied by farmer,
and remaining cane is supplied from concession land by
state-owned companies or private companies (Fig. 1). On
the other hand, R-SF process raw sugar into refined sugar
(RS) which is targeted to food and beverage industry
market. Raw sugar for refinery is imported mainly from
Thailand.
Recent analysis indicates that sugar industry perfor-
mance has not been fully optimal in terms of sugar pro-
duction, productivity and cost. As an illustration, in 2013
with cane area of approximately 470 thousand hectares,
sugar production reached 2.5 million tons was only able to
meet 48% of the total sugar demand, while the productivity
of sugar tends to decreases. In the period 1930–1940s, the
average sugar productivity in the country was around 15
tonnes per hectare, but current sugar productivity is less
than 6 tonnes per hectare (Table 1). Furthermore, the cost
of sugar production in Indonesia is approximately 20–80%
higher than Brazil, Thailand, India and Australia.
Production
Currently, there are 63 sugar mills (SMs) in Indonesia.
Milling capacities of sugar mills vary from\2000 TCD (14
SMs), 2000–4000 TCD (29 SMs), [4000–8000 TCD (14
SMs) and [8000 TCD (5 SMs). Forty SMs were built
around 100 until 184 years ago. Forty eight of SMs are
located at Java Island. High production cost is mainly
Fig. 1 Structure of current Indonesian sugar industry
637
caused by land competition and high labor cost especially
for SMs at Java Island. The spread of sugar mills, area and
productivity trends, consumption of sugar and milling
capacity is shown in Figs. 2 and 3. Indonesia produces
plantation white sugar from sugarcane, primarily produced
for direct human consumption. Indonesia also produces
refined sugar from imported raw sugar, which is generally
used for processing by the food and beverage industries. A
profile of Indonesian sugar industry is shown in Table 2.
In the production year 2014–2015, Java’s 48 sugar mills
accounted for 63% of Indonesian white sugar production.
The balance is produced by 15 sugar mills outside of Java,
primarily in Sumatera. These sugar mills produce planta-
tion white sugar from sugarcane with a total running
capacity of 245,900 tons of cane per day (TCD) or an
average of 3900 TCD per mill. Indonesian sugar mills are
aging, with approximately 40 mills over 100 years old
(Tables 3, 4). Only six sugar mills are less than 25 years
old. Old machinery results in poor recovery rates and dis-
courages farmers, who obtain higher margins from other
crops like paddy or corn. Given these factors, Indonesian
total sugarcane area, especially on Java, is declining.
Consumption
Sugar consumption is estimated to increase marginally to
5.6 MMT based on 1.4 percent population growth and
growing demand from the food and beverage industry
during 2015–2016. Direct human consumption is estimated
to be around 2.9 MMT, while the food and beverage
industry uses the balance. The direct per capita sugar
consumption in 2015–2016 is estimated at 11.42 kg. The
projections of Indonesian sugar consumption 2015–2019
are shown in Table 5. The projected requirement of sugar
for the period 2015–2019 is given in Fig. 4.
Major Problems of Sugar Industry
• Extreme weather conditions and climatic vagaries
• No coordination between R&D institutions and Exten-
sion wings of sugar industry as well as farmers.
• Lack of skilled human resources in the industry.
• Unabated increases in production costs especially for
PWS in Java.
• Competition of sugarcane plantation with other sectors/
crops.
• New Diseases and biosecurity issues.
• Lack of good sugarcane varieties.
• Low sugar productivity due to poor adoption of farm
technology, low efficiency of sugar factories,
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Table 1 Overiew of sugar industry in Indonesia showing area, production and sugar productivity trends from 2004–2015 Source: Indonesian
Ministry of Agriculture
Year Number of sugar factory Area (ha) Sugarcane Sugar yield (%) Sugar
Production (ton) Productivity (ton/ha) Production (ton) Productivity (ton/ha)

2004 59 344,793 26,743,181 77,6 7.67 2,051,644 5,95

2005 59 381,786 31,242,268 81,8 7.18 2,241,741 5,87
2006 59 396,440 30,232,835 76,3 7.63 2,307,027 5,82
2007 60 428,401 33,289,452 77,7 7.35 2,448,143 5,71
2008 61 436,504 32,960,166 75,5 8.10 2,668,428 6,11
2009 61 422,935 32,165,572 76,1 8.02 2,580,088 6,10
2010 62 418,266 34,216,549 81,8 6.47 2,214,489 5.29
2011 62 450,299 30,323,228 67,3 7.35 2,228,259 4.95
2012 62 451,191 31,888,928 72,1 8.13 2,591,687 5.86
2013 62 460,497 35,378,805 76,8 7.20 2,545,842 5.53
2014 63 477,123 33,723,376 70,7 7.65 2,579,173 5.42
2015 63 466,060 30,164,097 67,6 8.28 2,497,997 5.6

6000
5000
2744
2613
2488
2370
2258
2150
2039

4000
2602 1510
2554 1452
2508 1372
2462 1273
2417 1113
2373 1041
2329 972

3000
2287 800

2000
2956
2903
2850
2799
2749
2700
2651

1000
0
200020012002200320042005200620072008200920102011201220132014
Used by industry (x1,000 ton)
Household consumption (x1,000 ton)
PWS production (x1,000 ton)

Fig. 2 Plantation white sugar production and (TCD) consumption in

Indonesia
Fig. 4 Sugar production, consumption and import of sugar in
Indonesia (2015–2019) Source: Ministry of Agriculture (2015)

• Sugarcane farmers have developed mistrust in the

factory for correct determination of CCS so they do not
send good quality of sugarcane,
2 Ton Cane/Day
< 2,000
• Lack of diversification from sugarcane and its co-products.
3 • Fifty sugar factories (total 63) are concentrated at Java
9 14 2,000 -
4,000 Island, where land and labor competition is very high.
> 4,000-
5 6,000 • High cost of sugar production mainly in state-owned
> 6,000- companies PW-SF.
29 8,000
> 8,000- • Low efficiency of SFs located in Java which are old and
10,000
have low milling capacity (45 SFs out of 63 having
milling capacity under 5000 TCD).
• Major national milling companies choose their own R&
Fig. 3 Milling capacity (in tonne cane per day) of different sugar D and Extension investment system, ISRI efforts and
mills in Indonesia research recommendations are ignored.

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Table 2 Profile and characteristics of Indonesian sugar industry Source: GAIN Report Number: ID1614, (Anon 2016) and Ministry of Industry
(2016)
No. Description Sugarcane based Raw sugar based

1. Number of companies 18 11
2. Number of plants 63 11
3. Processing capacity 245,900 TCD (Tons of Cane/Day) 5.01 MMT of installed capacity
Avg. 3900 TCD per mill 3.697 MMT of running capacity
4. Raw material Sugarcane from mills’ own plantation and farmers Imported raw sugar
5. Number of processing day Avg. 160 days per year Avg. 320 days per annum
6. Annual production potential 2.5–3.0 MMT 3–4 MMT
7. Number of workers
On-farm 28,350 None
Off-farm 27,427 4833
8. Number of farmers involved 1,328,250 farmers families None
9. Age of existing mills 1–184 years old 3–12 years old
10. Climate influence to production Strong Almost none
11. Overseeing agency Ministry of Agriculture (GOI Reg. No. 17/1986) Ministry of Industry (Law No. 5/1984)

Table 3 Status of sugar mills in Indonesia sucrose content in varieties, low productivity of sugar,
Sugar mill age (years) Number of sugar mills Percentage (%) unpredictable long-term climate change, inadequate
research support and skilled human resources.
100–184 40 64.5 In order to increase the production of sugar which has
50–99 3 4.8 high competitiveness, improvement in on-farm and off-
25–49 14 22.6 farm sectors must be brought about. Improvements include
\25 6 8.1 rearranging sugar policy to be more conducive and inte-
Total 63 100 grative, the amalgamation of several small factories to
minimum capacity of 6000 TCD, intensification of existing
areas to attain sugar productivity of 8 tonnes per ha,
Government Efforts to Improve Performance expansion of cane area outside Java, construction of new
of Sugar Sector sugar mills, consolidation of land, integration between
refined and plantation white sugar mills, and the empow-
The low competitiveness is the main problem of Indone- erment of Indonesian Sugar Research Institute (ISRI).
sian sugar Industry. This is mainly because of low installed Existing sugar mills are expected to produce 3.57 mil-
milling capacity, obsolete technology, old machinery and lion tons of sugar, and 2.13 million tons will be produced
equipment, inefficient mill performance, dependence on from new sugar mills. For producing 2.13 million tons of
single product, i.e., sugarcane, dependence upon the supply additional sugar, it will need 10–25 new sugar factories
of sugarcane from farmers, high production costs, low having capacity between 6000 and 15,000 TCD with

Table 4 Milling capacity and ownership of plantation white sugar factories (PW-SF) in Indonesia
No. Milling capacity (TCD) The number of plantation white sugar factories (Unit)
State own companies Private Total number
PW-SF PW-SF PW-SF

1 \2000 13 – 13
2 2000–4000 28 4 32
3 [4000–6000 2 3 5
4 [6000–8000 7 4 10
5 [8000–10,000 – 2 2
6 [10,000 – 1 1
Average 50 14 63

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Table 5 Sector-wise projections of sugar consumption in Indonesia (2015–2019) Source: Ministry of Agriculture (2015)
No. Parameter Projection
2015 2016 2017 2018 2019

1 Population (91000) 255,462 258,705 261,891 265,015 268,075

2 Direct consumption of plantation white sugar (PWS)
(kg/capita/year)
a. Household consumption 6.41 6.13 6.07 5.81 5.74
b. Hotels, restaurants and street food vendors 3.34 3.34 3.34 3.34 3.34
c. Home industry 1.67 1.73 1.79 1.85 1.92
Total (kg/capita) 11.42 11.20 11.20 11.00 11.00
Total PWS consumption (91000 tonne)
a. Household consumption 1,637.5 1,585.9 1,589.7 1,539.7 1,538.8
b. Hotels, restaurants, and street food vendors 853.2 864.1 874.7 885.2 895.4
c. Home industry 426.6 447.6 468.8 490.3 514.7
Total 2,917.4 2,897.5 2,933.2 2,915.2 2,948.8
3 Refined sugar (RS) consumption for industry (91000 tonne)
a. Small industry 416.1 436.9 450.0 463.5 477.4
b. Medium and large industry 2,472.7 2,596.3 2,674.2 2,754.5 2,837.1
Total RS consumption (3a?3b) 2,888.8 3,033.2 3,124.2 3,218.0 3,314.5
4 Total sugar (PWS ? RS) consumption (2?3) 5,806.2 5,930.7 6,057.4 6,133.1 6,263.3
Total sugar consumption per capita (kg/capita/year) 22.73 22.92 23.13 23.14 23.36

expansion of 3,50,000 ha of additional sugarcane area.
Indonesian government program for building new sugar
factories and expansion of sugarcane area should be fully
supported by government policy through credit or incen-
tives to support investors, concurrent with infrastructure
investment.
The average sugarcane productivity in 2013 was
around 76 t/h with a CCS of 7.18%. The low sugar
productivity was caused by low on-farm technology
adoption and low efficiency of sugar factories. One of the
factors that caused low adoption of on-farm technology is
the lack of trust on the part of sugarcane farmer in the
method of determination of CCS by the factory. This does
not encourage the farmer to send good quality of sugar-
cane to the mill and also results in low adoption of
improved farming technology. Government regulation is
needed to support the transparency of sugar factories on
the determination of CCS% cane from the farmer and the
application of core sampling analysis in sugar factories.
Better post-harvest management by sugar mills is needed.
While increasing sugar mill efficiency can be done by
increasing milling capacity, rehabilitation of some
equipment’s from old sugar mills and improvement in
management especially, of some state-owned sugar mill
companies, is required. The varieties of cane available to
producers should be improved, and government has a role
to play in any plant improvement program. The Indone-
sian Sugar Research and Development Center (P3GI)
should collaborate with other national and international
sugarcane research centers, for the development of
improved varieties, surveillance of pests and diseases and
improved production technology (Goebel et al. 2014; Sari
and Wegener 2015). It is necessary to develop better
harvesting techniques, including evaluation of mechanized
harvesting. A comprehensive cane development program
with judicious use of fertilizers, water management and
post-harvest logistic should be worked out for better cane
yield and sucrose content. Improving research and
development on sugarcane and sugar is important in
Indonesia. The ISRI (Indonesian Sugar Research Insti-
tute), the oldest sugar research institute in the world is
now facing financial difficulties. This problem was cre-
ated by changing ISRI to a private company responsible
for its own funding. Government policy should revaluate
the status of ISRI. The government regulation for allo-
cating funding on research and development is important,
because all the leading sugar industries in the world are
supported by a strong research and development
organization.
There are seven co-products of sugarcane industry
which have potential to be developed in Indonesia, i.e.,
anhydrous ethanol, electricity, particle board, hydrous
ethanol, baker’s yeast, citric acid and acetic acid. However,
the development of co-products should be supported by
intensive market study of co-products in Indonesia,
increasing capacity of some potential sugar mills or

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developing co-products at mills having capacity more than
5000 TCD.
The government income from import tariff of sugar
should be allocated for various programs on revitalization
of Indonesian sugar industry. Sugar policy is a key factor in
driving performance on improvement of Indonesian sugar
industry. Integrated policies between ministries on sugar
regulation are important. Fluctuation changes in production
and productivity of sugar are strongly influenced by the
prevailing policy. Therefore, the government is currently
formulating a better sugar policy in the field of institu-
tional, production and marketing of sugar, as well as
expanding the area under the crop.
R&D Initiatives by ISRI
1. The main focus of ISRI, Indonesia is to develop high-
sucrose and high-yielding sugarcane varieties for the
sugar industry. The field performance of existing
sugarcane varieties widely used in Indonesia is
declining fast, making their commercial use uneco-
nomical. The ISRI has started evaluating its local pool
of varieties as well as varieties imported from other
countries.
2. Other research programs at ISRI focus on the seed
production, management of pests and diseases,
641
improved agronomic interventions and strengthen the
collaboration between sugarcane farmers and sugar
factories.
3. Development of viable technologies for diversification
and value-added products from sugarcane and its by-
products.
4. Reducing the cost of sugarcane production through
better varieties, improved management, increasing
input use efficiency and participatory research.
Compliance with Ethical Standards
Conflict of interest The authors declare that they have no conflict of
interest.
References
Anon. 2016. Indonesia sugar Annual Report 2016, GAIN Report
Number: ID1614.
Goebel, Francois-Regis, A. Etik, and M. Peter. 2014. The economic
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405–410.
Toharisman, A., Triantarti, and F, Hasan. 2013. History of sugar
industry in Indonesia—Rise and fall of Indonesian sugar
industry. Proceedings of International Society of Sugarcane
Technologists 28: 1–9.
Sari, D., and M. Wegener. 2015. Indonesian sugar production and
recommendations for industry recovery. available at SSRN:
https://ssrn.com/abstract=2620353.
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