Indonesia's Sugar Self-Sufficiency Dream: Can It Reclaim Its Past Glory?

The Indonesian government’s plan to oblige all refined sugar industries to own their own sugarcane plantations, in a bid to accelerate national sugar self-sufficiency, is facing scrutiny. Observers suggest the policy is not easy to implement due to business model constraints, large investment needs, and land availability.

Khudori, an agricultural analyst from the Indonesian Political Economy Association (AEPI), noted that the majority of refined sugar factories in Indonesia were originally built as stand-alone facilities, not integrated with plantations. He explained that most of the 11 refined sugar factories are located around ports because they rely on imported raw sugar, meaning their production systems differ fundamentally from cane-based sugar mills.

“If they are required to own their own plantations, companies must make additional investments to transform their processing systems from raw sugar to sugarcane. This is not a minor adjustment but a major transformation requiring significant cost and time,” Khudori stated on Monday (3/8/2026).

Beyond investment, Khudori questioned the readiness of land to support the policy. He argued that sugarcane plantations must be located within an efficient distance from the factory to prevent logistics costs from soaring. He believes the main challenge for the national sugar industry is not merely the integration of factories and plantations, but the low productivity of domestic sugarcane.

Khudori highlighted that Indonesia was once the world’s second-largest sugar exporter in the 1930s, with a yield reaching 11-13%. Today, the average yield is only around 6-7%. “Productivity has plummeted due to many factors: seed quality, weak research, and suboptimal cultivation practices. We used to have a world-renowned sugar research centre in Pasuruan, but now our research is barely heard of,” he said.

Previously, Minister of Agriculture Amran Sulaiman affirmed the government’s commitment to requiring all refined sugar companies that rely on imported raw sugar to build their own plantations. He stated this mandate is not a new regulation, as it is already stipulated in Law Number 39 of 2014 on Plantations, and the government will now ensure all business actors comply.

Amran argued the policy is necessary because the influx of imported refined sugar has suppressed the absorption of domestic sugar production and harmed local sugarcane farmers. The government is also accelerating a national ratoon cane rehabilitation programme covering 100,000 hectares this year and 150,000 hectares next year to boost national sugarcane productivity.