ANALYSIS COMPETITIVENESS OF SUGARCANE FARMING IN CENTRAL JAVA AND EAST JAVA

This study aims to determine the competitiveness of sugarcane farming in Central Java and East Java based on comparative advantage (DRCR) and competitive advantage (PCR). The method used was the Policy Analysis Matrix (PAM). The result in Central Java explained that the sugarcane farming do not have comparative advantage but have competitive advantage. It is indicated by the value of Domestic Resource Cost Ratio DRCR>1 which is 1.23 and the value of Private Cost Ratio PCR<1 which is 0.71. Meanwhile The result in East Java explained that the sugarcane farming do not have comparative advantage but have competitive advantage. It is indicated by the value of DRCR>1 which is 1.05 and the value of PCR<1 which is 0.56. Partial test was conducted to find out how many respondents in each region in Central Java and East Java that have competitiveness sugarcane farming. Based on the partial test of each respondent in Central Java, about 51.67%, 45.00% and 3.33% of respondents are categorized as very competitive, medium competitiveness and very low competitive respectively. Meanwhile, in East Java Province, there are 25.00% of respondents with very high competitiveness, 65.00% medium competitiveness and 10.00% very low competitive.


INTRODUCTION
One of the commodities that has been developed since the past in Indonesia is sugar cane commodity.The business of sugar cane was developed by of Dutch East India government during the oppression era.At that time, the local sugar cane farm could produce 3 millions of sugar.Sugar cane is a very important commodity in Indonesia.The increasing rate of sugar consumption due to the increasing number of population and the development of industries that use sugar as their main raw material have made sugar cane as the essential commodity.The International Sugar Organization (ISO) stated that the Indonesian sugar consumption will grow 4% every year.ISO is predicting that in 2012-2013, the import of raw crystal sugar of Indonesia will continue to increase even surpassing China which would make Indonesia as the first importer of Sugar all over the world (Kurniasari, et al, 2015).
One of the main causes of Indonesia to import sugar is the incapability of local sugar industries in fulfilling the increasing needs and demands from the community for sugar.The decreasing productivity of sugar in Indonesia is proved by the decreasing amount of sugar production produced by farmers and the sugar factories.The indecent management of national sugar factories are causing Indonesia to be incapable in fulfilling the sugar demand thus the annual import is required (Prabowo, 2013).
Even since the rule of Dutch East India Government, the sugar cane has been seen as the commercial and potential commodity and being developed continuously by the Indonesian Government through the state-owned and the private sector farm companies.The sugar cane farming is also conducted by the local farmer through the government policy regarding the Intensification of Community Sugar Cane by the rotational planting area system.
The productivity of community sugar cane farm which extends to 56% of sugar cane farms in Indonesia still considered low.Fitriani (2013) mentioned that the potential production of sugar cane farm in Indonesia could reach 8 tons per ha, while the BPS data shows the productivity of Indonesia Sugar Cane in 2013 was only 5.8 tons per ha.
The sugar cane has a very important role in moving the economic condition of one particular area.This role related to its position as the main raw material sangat rendah.Sementara itu di Provinsi Jawa Timur terdapat 25,00% responden berdaya saing sangat tinggi, 65,00% berdaya saing sedang dan 10,00% berdaya saing sangat rendah.Sulawesi.Aside from that, it can be also discovered that 64.24% of sugar raw material production in Indonesia comes from Java Island.While Sumatra has 34.41% percentage and Sulawesi has 2.34%.In that order, the biggest supplier of sugar in Indonesia is located in Java Island.Java Island has the highest production compared to other islands.In Java Island, there are four provinces that have the highest sugar cane production including East Java in the top rank, followed by Central Java, West Java, and Yogyakarta Special Province.East Java Province has 75.73% of percentage in producing sugar cane, while Central Java has 17.73%.These two provinces are the regions that own massive contribution in supplying the sugar cane in Java Island.This condition has become the basis of this research to study the sugar cane competitiveness in Java Island especially in Central Java and East Java Province, thus Indonesia would be no longer depended on sugar import.

Kata
One of the reasons of low competitiveness of sugar commodity is the incapability of national sugar industry in fulfilling the national sugar demand, thus the sugar import is relatively high (Susilowati and Rahman, 2016).The high rate of sugar import in Indonesia resulted in decreasing price of sugar, therefore the farmer's motivation to conduct sugar cane agricultural farming also decreased.
In that order, the development of several determining factors of this commodity has to be monitored.
Indonesia has been recorded in the sixth place of the biggest sugar importer in 1981.However, the current sugar production has decreased this record.In 1990, Indonesia is no longer included in the 10 biggest sugar importers (PSE, 1996).
During the 1984-1986 period, the world sugar trading marked by the overproduction which resulted in the decreasing price towards its lowest level.However, since 1989, this condition has turned into over demand that causing the depletion of stock and the rocketing value in the world market.World Bank has predicted that the world sugar price will continue increasing until the year of 2007, with the average price of US$ 0.13 per pound or 12 percent more than the price in 1992 (World Bank, The high price of sugar in the domestic market is a reflection of low competitiveness in the market.Government policy in the field of production, processing that leads to intervention to the problem.Meanwhile, subsidies are only aimed at suppressing higher prices and world market prices.The market's actors that favor the subvention are sugar factory, BULOG and traders.On the other hand (the customer) has to bear the loss due purchasing sugar with a higher price.For the sugar cane's farmer, although they also favor the subvention in the form of provenue price and production facility price, they are still at disadvantages due to the inability to produce other commodities.
Due to the emergence of that problem, then the analysis towards sugar cane business competitiveness need to be conducted as the consideration in selecting the policy to improve the competitiveness of sugar cane's farmer.This research aimed to discover the comparativeness and competitiveness of sugar cane farming in East Java and Central Java.

Location and Data
The selection of the research location was purposive because geographically the land structure in Kediri was a good sugar cane plantation that has a high sugarcane rendering while for the location of Central Java was chosen in Karanganyar this was due to have in place have a sugar factory with the largest milling capacity and one of the cane centers.The survey was conducted at government-owned sugar cane plantations, where the selected recipes were built from the Tasikmadu sugar factory in Karanganyar and Pesantren Baru sugar factory in Kediri.
Types of data collected in this study were The first line is a calculation based  This number shows that the input price in the international market is higher compared to the domestic prize as well as the inefficient input utilization.
Aside from that, the allocation of input cost from the domestic sector is larger than the input allocation from the international sector.Therefore, the transformation in social price only has a small influence towards the total cost of social input.By discovering the difference of price between the domestic and the international, the competitiveness of sugar cane agricultural business in Central Java and East Java Provinces could be found.The sugar cane agricultural business in Central Java and East Java Province is financially profitable, however, it's economically disadvantaging.
This can be seen from the profit column.
The financial profit or the profit of sugar cane agricultural business of private sector in Central Java and East Java Province is positive, while for the economic or social profit is negative.The difference between financial and economic profit also valued positively.The government policy is causing the profit transfer from the consumer towards the producent.

Analysis of Comparative Advantage of Sugar Cane Farming in Central Java and East Java Provinces
The comparative advantage is the The social profit of sugar cane agricultural business in Central Java and   In that case, the medium/decent criteria still possible to be developed with a note that the government policy that could increase the sugar social price exists, this policy can be embodied as pricing policy.
The pricing policy will increase the selling price of imported sugar that could increase the comparative advantage.While there are still two respondent (3.33%) in Central Java and six people (10%) that conceive neither comparativeness nor competitiveness which do not need to be developed.

CONCLUSION AND SUGGESTION
The sugar cane agriculture businesses in Central Java and East Java Province have The government policy that could increase the sugar social value is also required.This policy can be embodied as the pricing policy.Pricing policy could increase the selling price of imported sugar that could increase the comparative advantage.
Kunci : Daya Saing, Gula, PAM of sugar industry.Sugar is a strategic commodity protected by the government, thus the interventions from them are heavily conducted towards sugar industry.As the manifestation of government concern towards sugar industry, several policies have been issued through price policy, which regulating sugar provenue as the price acceptable either by farmer or sugar industry as the producent.If reviewed from the perspective of sugar cane production in Indonesia, there are three regions that have a massive contribution to sugar cane production including Sumatra, Java, and primary and secondary data and data were collected from September to December 2016.Primary data were obtained from interviews with farmers who run sugar cane farming, as respondents using a structured questionnaire.The number of respondents used in each district 60 cane farmers.The sample selection method was simple random sampling.Sugarcane farmers who become respondents are farmers who are milled sugar cane, so that more understand the inputs used to produce the output.Analysis Method This research is analyzed using PAM (Policy Analysis Matrix) method.Stages in the preparation of PAM tables are as follows (Monke and Pearson in Setiawan et al, 2014): 1. Identify all inputs used in the production process 2. Allocate tradable input and non tradable input.3. Calculating the price of shadow input, output, and exchange rate.4. Analyze comparative and competitive advantages and policy impacts with the PAM model.PAM is composed of a matrix constructed by inputting components of acceptance, cost, and profit.The PAM analysis results inform the competitive and comparative advantage as well as the impact of government policies on particular commodity systems.Model of PAM matrix can be seen in table 2.Where : The acceptance of sugar cane farming at private prices = A Total cost tradable sugarcane farming at private price = B Total cost of non tradable sugarcane farming at private price = C Private profit = D The acceptance of sugar cane farming at social prices = E Total cost tradable sugarcane farming at social price = F Total cost of non tradable sugarcane farming at social price = ability of a particular region to produce a commodity with decent quality and efficient cost.The comparative advantage can be discovered from the social profitability (SP) exist in the PAM matrix on the second line of profit column.Aside from that, domestic resource cost ratio (DRCR) is also used.The indicators of social profit and the domestic resource cost ratio are the indicators acquired from the calculation by using social price or the price that applied in the international market.
rice and the ecology of corn production by using Policy Analysis Matrix (PAM).The production of rice and corn in the entire plants' ecology as what shown have negative private profit in the rice farming and the ecology of corn irrigation that shows the lack of competitiveness in farmer's level.In the research of Ariani, et al (2006) regarding the competitive analysis of sugar cane agriculture business in East Java Province, it was acquired that the sugar cane agriculture business in East Java Province is financially profitable.However, in economic side, the losses experienced by the farmer in Madiun and Kediri Region are IDR 2 million -IDR 4 Million per Ha.This difference caused by the market distortion resulted from the government policy.The sugar cane agriculture businesses in Madiun and Kediri Regency have no competitive advantages, while the sugar cane agriculture businesses in Malang and Jember Regency show the opposite (DRCR<1).The sugar cane agriculture businesses in Madiun, Kediri, and Malang Regency (agriculture farm) will have the comparative advantages if the productivity of sugar cane is improved by 20% or the global price of sugar is 220 USS per ton.The sugar cane agriculture businesses in the entire location could pay the scarification of efficient domestic price (PCR<1).The input policy regulated by the government has induced an incentive towards sugar cane's farmer in the form of half prices of input price paid by them.Aside from that, the sugar selling price relished by the farmer is higher, around 30-45% of the actual sugar selling price.The research conducted by Saptana, et al (2002) regarding the efficiency and the competitiveness of sugar cane and tobacco agriculture businesses in East Java and Central Java show that the sugar cane agriculture businesses in Kediri, Ngawi, and Klaten Regency do not have the comparative advantages with DRC>1 coefficient, however they still have the competitive advantages showed by PCR<1 coefficient.However the competitive own by sugar cane farmer is tend to have resulted from the protective policy.The implication is when the sugar cane plant to be developed continuously then the invocation in producing primary good variety, the balance of fertilizer utilization, the improvement of efficiency in the processing industry through the management of brand standardization, commodity can be seen in accordance with the indicators of Private Profit and Private Cost Ratio.The private profit is calculated based on the price from the accumulation of domestic price factor and the addition output value from the input price that applied in the market (private price) and the private cost ratio (PCR).These indicators show the level of profit financially and the level of efficiency for the utilization of input resources that trading at the private price.
competitiveness according to the competitive advantage but conceive no comparative advantage.The protection towards the output and input of sugar cane agriculture business in Central Java and East Java due to the policy applied by the government, thus the sugar cane farmer receive output price that higher than its social price and the tradable input price that lower than the social price.The output and input protections applied are one of the efforts implemented by the government to increase the production.The sugar cane agriculture businesses in Central Java and East Java Province actually decent to be developed because of their medium competitiveness level for national marketing, however not feasible to be traded globally.The production enhancement also required to be conducted by developing the innovation instrument and expeditious technology, for example exchanging the old machines of sugar cane grinding and the development of sugar cane variety that has high immersion thus it can be expected to increase the comparativeness and the competitiveness.

Table 4 .
Indicator of Comparative Advantage of Sugarcane Farming Central Java and East Java Provinces

Table 5
The Indicators of Competitive

Table 5 .
Indicator of Competitive Advantage of Sugarcane Farming in Central Java and East Java Provinces

Table 6 .
Criteria Assessment of Competitiveness of Each Respondent ini Central Java and East Java Province in 2016