Farmers Suffer Even More
Coordinator of installation processing Achmad Muzayyad checks machines at Toelangan sugar factory in Tulangan district, Sidoarjo, East Java, on Wednesday (10/5). The plant has stopped operations due to difficulties in obtaining raw materials.
SURABAYA, KOMPAS — Although the sugar industry contributes about Rp 411 trillion (US$30.84 billion) to the country’s gross domestic product (GDP), the attention to improve the sugarcane plantation remains low.
The income of sugarcane farmers has continued to drop, and even productivity at sugar processing businesses has declined.
According to Kompas’s monitoring of a sugarcane plantation in East Java, Central Java and Yogyakarta on Saturday, the fate of sugarcane farmers and sugar the processing industry is at stake during the current harvest season.
Abdul Wachid, chairman of the Association of Indonesian Smallholder Sugarcane Farmers, said the problems faced by farmers were always the same in every harvesting season.
There are five main issues, namely weather anomalies, the slow revitalization of sugar factories, the influx of imported sugar, the new sugar ceiling price of Rp 12,500 per kilogram, a change in the credit mechanisms for farmers and a decline in the allocation of subsidized fertilizer.
"Until mid-May, the weather remains unpredictable as rain continues, especially in Java. Rain hampers the ripening process of sugarcane because it causes high water content and low yield, or low sugar content," Wachid explained.
The Agriculture Ministry’s director for plantation, Bambang, pointed out that the sugarcane cultivation and sugarcane processing industry supported the lives of almost half of Indonesia’s population.
In fact, conditions canbe improved if the problems, which hamper sugarcane plantations and the sugarcane processing industry, as well as the processing of white crystal sugar, can be minimized.
"For that, a stronger synergy among all parties involved— especially the government— should be established," Bambang said.
Currently, sugarcane farmers who harvest early, such as in Pati district, Central Java, only produce about 500-600 quintals per hectare, a decline from 700 quintals per hectare previously harvested.
The rendement (sucrose content) standsonly 5.5 percent, far from ideal level of 7.5 percent. These conditions worry other farmers who have not yet harvested, such as in Malang, East Java.
Weather anomalies also make it difficult for sugar mills to predict the quantity and quality of their sugarcane crops. Because of this problem, most mills have rolled back the milling period from May to after Idul Fitri or early July. They avoid major losses due to the poor quality of sugarcane.
Not as expected
On the other hand, the condition of sugar factories falls below expectations because of their slow revitalization process. Government funds of Rp 3 trillion, meant for the revitalization of sugar mills owned by state owned plantation company PT Perkebunan Nusantara (PTPN) IX, X and XI (each receiving Rp 1 trillion) for the 2015- 2017 period, have not been fully disbursed.
In addition to such classic problems, farmers are also hurt by the new ceiling sugar price of Rp 12,500 per kilogram. In addition, the new policy lacks supporting regulations, such as a mechanism for purchasing sugar from the farmers, a standard for setting the price of sugar and the determination of Value Added Tax (VAT).
As a result, farmers are often confused whether their sugar will be purchased by the State Logistics Agency (Bulog), whether the supply is owned by PTPN or whether they must sell their sugar in the market through auctionslike in previous years. They also question the price of sugar set for sugar farmers and how much they are taxed.
Due to regulation uncertainties, thousands of farmers at Trangkil sugar factory and Pakis Baru sugar factory in Pati regency, as well as Madu Kismo sugar factory in Yogyakarta are unable to sell their sugar.
In Pati, at least 1,500 tons of sugar production last year and 2,099 tons of production this year could not be sold on the auction market.
"Big traders are refusing to buy sugar above Rp 10,000 per kilogram because they are afraid they will have to pay avalue-added tax of 10 percent, which would incur losses," said Supriatno, 50, a farmer in Bulumanis village, Pati.
Farmers want sugar prices to range between Rp 10,500 and Rp 11,000 per kilogram, and with zero percent VAT. They also demand that tax be borne by the buyers, and not charged to the farmers. Lastly, farmers want the government to set the pricefor PTPN’s sugar, which must be purchased by Bulog, at Rp 10,200 per kilogram.
High cost
Farmers’ demand to set a sugar price in the range of Rp 10,500 to Rp 11,000 per kilogram is based on high production costsat sugarcane plantations, which still heavily rely on a large workforce. Almost all plant activities, from the planting of seedlings to cutting and harvesting crops, are still carried out by human labor.
Production costs have already exceeded Rp 9,000 per kilogram because much of the land farmers use must be leased. The size of the farming area continues to shrink. Also, these costs do not include interest payments. Previously, farmers paid an interest rate of 6 percent per annum for a food and energy resilience (KKPE) credit facility, which has been replaced with the People\'s Business Credit (KUR)loan facility and carries an interest rate of 9 percent per year.
Chairman of the East Java Sugarcane Farmers’ Cooperative, Marzuki Abdul Gofur, said most farmers rely on working capital from bank loans. However, the number of farmers who can obtain low-interest KKPE and KUR credits remains very small, only about 20 percent, while the other 80 percent still uses commercial loans with an interest rate of 14-20 percent per year.
Most farmers are unable to meet the KUR requirements, which include having a maximum land area of 2 hectares and paying installments every month.
Sugar cane is harvested once a year, unlike rice that can be harvested three times a year. Sugarcane farmers can only pay their installments after harvest season. Therefore, sugarcane farmers hope they will good-quality seeds and fertilizer subsidies to help reduce the high costs of production.
"[Sugarcane] farmers face a heavy burden. There should a better solution so that the sugarcane farmers can overcome their struggles,” said Abdul Gofur.
(KRN/WHO/HRS/GER/WER/ACI/SYA/NIK)
