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

Keywords:

• Netherlands Indies
• Indonesian revolution
• international sugar market
• Java sugar economy
• sugar export
• sugar production

Public interest statement

From the turn of the nineteenth century through the second decade of the twentieth century, Java was the world’s second-largest producer of sugar, after only Cuba. The development of the sugar industry and economy in Java was not limited to the cultivation of sugar cane, but also to the development of unique sugar cane types that are disease resistant and enable efficient production. However, the dominance and fame of the Java sugar industry deteriorated after the 1930s due to the interplay of internal and external variables such as world economic crises, massive economic competition, Japanese occupation, World War II, the Indonesian revolution, and post-revolutionary crises. Therefore, this paper argues that a combination of internal and external factors triggered these downward trends, in which the sustainability of Indonesian sugar production in Javanese plantations and Indonesian development policies, combined with external factors, cause a significant decline in the Java sugar economy.

Notes

1. The 1884 commercial crisis occurred when global sugar supply was raised to such an extent that the price of sugar on the free export market abruptly dropped. Prices in Java have dropped below current production costs. The average world export price nearly halved between 1882 and 1884, owing largely to the expansion of the sugar beet industries in Europe and the USA (see Wiseman, 2001, p. 35).

2. The factory system was a new manner of producing goods that emerged during the Industrial Revolution. To mass-produce goods, the factory system included powered machinery, division of labour, unskilled labour, and a centralised workplace. Changes in technology in the Java sugarcane sector frequently brought about changes in the organisation of land use, labour, and settlement patterns. The centre factories were outfitted with mechanical centrifuges for separating sugar from masseuse-condensed, boiling cane juice-and produced “centrifugal sugar” for international sale (see Galloway, 2005, p. 4; Walker, 1993, pp. 187–188).

3. Markets were disrupted and shipping capacity was constrained at the close of World War I, resulting in more sugar being hoarded across Java. Sugar prices fell to their lowest levels in years as a result. The 1918 influenza outbreak caused considerable mortality, particularly in the months of October to December 1918, but continued in the first months of 1919 over Java, particularly in Eastern Java. While the mortality shock generated temporary labour shortages and affected production operations in a variety of agricultural industrie(see Gallardo-Albarrán & de Zwart, 2021, pp. 1–10,18).

4. The word indonesianisasi refers to the elimination of Dutch tutelage and the ensuing structural change of Indonesia’s economy during decolonization and the years immediately following Dutch recognition of Indonesian independence in December 1949. This word was initially applied in a very specific way, referring to the substitution of Dutch officials and managers in the Indonesian government bureaucracy and private firms in the years preceding the nationalization of remaining Dutch business assets in Indonesia in December 1957. There is increasing consensus that the phrase should be used more broadly to refer to the shift of economic leadership in newly independent Indonesia, which has far-reaching implications for future economic development (see Lindblad, 2002, p. 55)

Additional information

Funding

The author received no funding for this research

Notes on contributors

Dagm Alemayehu Tegegn

Dagm Alemayehu Tegegn is a Ph.D. student in the College of Liberal Arts, Department of History at National Cheng Kung University in Taiwan. He received his master’s degree from Jimma University Ethiopia. He was an academic staff of Bule Hora University, Ethiopia.

Frank Dhont

Frank Dhont is an Associate Professor in the Department of History of National Cheng Kung University, Taiwan. He specializes in Southeast Asian history and particularly in insular Southeast Asia. His research focus is on the struggle of the Indonesians against Dutch colonialism from the early age of European colonialism extending to the 20th century and Indonesian independence. He is particularly interested in the Japanese occupation of Indonesia and Southeast Asia, the socio-political changes this brought about in society especially for ordinary people and the memory of World War II in the region.