SUGARCANE FARMERS IN EAST JAVA: INSTITUTIONAL ARRANGEMENT PERSPECTIVE
In 1930â€™s decade, Indonesia was recognized as one of the great sugarproducing Â countries Â in Â the world. Â Sugarcane Â is mostly Â grown Â in Â East Â JavaProvince. This area contributes about 40 percent to national sugar production.However, the performance of sugar industry in East Java during the last decadehas declined, which is shown in decreasing volume of production and increasingsugar price. This study utilized the analysis of institutional arrangement to identifythe problems. Â In details, Â this research empirically compared contract Â (credit)and Â non-contract Â (non-credit) Â sugarcane Â farmers. Â This Â research Â found Â thatinstitutional arrangements between economic actors Â in sugar industry are notsuitable, especially for sugarcane farmers. In the case of share-yield system, dueto lack of institutional arrangements, sugarcane farmers rarely get any molassesshare from sugar mill. Another, in the credit point of view, cooperative usuallybears on Â sugarcane Â farmers Â the higher Â interest Â from Â legal rules. Lastly, whencooperative gives aid in the form of seed/fertilizer to sugarcane farmers, it is doneintransparently.
Keywords: institutional arrangements, contract systems, sugarcane farmers, EastJava, Indonesia