The downhill journey of the Java sugar economy in the Netherlands Indies (Later Indonesia) from the late 19th century to the mid-20th century

Abstract

Java Island was the second largest world cane sugar producer and sugar exporter to the international market next to Cuba for more than four subsequent decades around the turn of the 19th century. The economy of Java had shown a miracle development through high production efficiency and international market supply between 1870 and the 1920s. During this period colonial growth was characterized by liberal and increasingly developmental policies. However, the Java sugar market faced constraints and continued to be checked by crises in which Indonesia actually fell behind the rest of the world economy. Thus, this paper examines how and why the Java sugar industry quickly declined after 1930 from a position of hegemony in the international sugar economy to a purely domestic Indonesian market level. The paper argues that the interplay between international factors and domestic challenges resulted in a significant decline in the Java sugar economy. These factors were the global economic crisis; the Second World War and the Japanese occupation; stiff market competition; the impact of the international sugar agreement; the Indonesian revolution and the post-revolutionary crisis; complemented by policy and institutional problems. This confluence of internal and external causes precipitated the decline of the Java sugar sector and the problem of sustainable sugar production in Indonesia. Within three decades, Java’s prestige and fortune in the global sugar trade were destroyed. Political upheaval following WWII had initially crushed the sugar sector, but after 1968, Indonesia made significant efforts to revitalize it.