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PUBLISHED DATE: - 01-06-2024
PAGE NO.: - 1-6
VALUE-ADDED DISTRIBUTION ANALYSIS IN
THE BROWN SUGAR (SAKA) GROINDUSTRY
Sihombing Piliang
Agribusiness Study Program, Faculty of Agriculture, Andalas University, Indonesia
INTRODUCTION
The production of brown sugar, locally known as
Saka, plays a crucial role in the rural economy of
Bukik Batabuah Village in the Canduang Sub-
district, Agam Regency. This traditional sweetener,
derived from sugarcane, has a significant cultural
and economic impact, providing livelihoods for
many local families. Despite its importance, the
distribution of value-added within the brown sugar
groindustry is not well understood. This study aims
to analyze the distribution of value-added along the
Saka production chain, from primary producers to
final consumers, to identify disparities and
opportunities for improvement.
Value-added
analysis
is
essential
for
understanding how economic benefits are
distributed among different stakeholders involved
in the production process. In the context of the
brown sugar industry, this includes sugarcane
farmers, local processors, middlemen, and
retailers. By examining the value-added at each
stage, we can identify which stakeholders capture
the most value and which ones are disadvantaged.
This analysis provides a foundation for developing
strategies to enhance value capture by primary
producers and promote equitable growth.
The study is particularly relevant given the
challenges faced by small-scale producers in rural
areas, such as limited access to markets,
technology, and financial resources. These
constraints often result in lower value capture and
income for the primary producers, who are
essential to the sustainability of the groindustry. By
addressing these issues, we can contribute to the
development of more sustainable and inclusive
economic practices.
This introduction outlines the significance of the
RESEARCH ARTICLE
Open Access
Abstract
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brown sugar groindustry in Bukik Batabuah
Village, the importance of value-added distribution
analysis, and the objectives of this study. The
subsequent sections will detail the methodology,
present the findings, and discuss their implications
for policy and practice.
Objectives:
To analyze the value-added distribution in the
brown sugar groindustry.
To identify the key factors influencing value
addition at different stages of production.
To propose recommendations for enhancing value
capture by primary producers.
Through this analysis, we aim to contribute to the
understanding of value distribution in traditional
agro-industries and to support the development of
strategies that can improve economic outcomes for
rural communities involved in brown sugar
production.
METHOD
The process of analyzing value-added distribution
in the brown sugar (Saka) groindustry involved
several key steps to ensure a thorough and
accurate evaluation. Initially, the production
process was mapped out from the cultivation of
raw sugarcane to the final sale of brown sugar. This
mapping identified all critical activities and
stakeholders involved at each stage, including
sugarcane farmers, local processors, middlemen,
and retailers.
Data collection commenced with semi-structured
interviews with these stakeholders to gather
detailed information on their production practices,
input costs, revenue generation, and challenges
faced. Focus group discussions (FGDs) were then
conducted to delve deeper into common issues and
explore potential collaborative solutions among
producers. Field observations provided an
opportunity to directly witness the production
process, validating the information gathered
through interviews and providing practical
insights into Saka production.
Simultaneously, secondary data were collected
through document analysis and reviewing financial
records from producers and processors. Relevant
literature, government reports, and industry
publications helped contextualize the findings,
while financial records offered concrete data on
cost structures and revenue streams.
The data analysis phase began with calculating the
value-added at each stage of the production chain.
This calculation involved subtracting the costs of
inputs from the revenue generated, thus
highlighting the contribution of each stage to the
final product's value. Stakeholder analysis
followed, focusing on the distribution of benefits
among different groups. Descriptive statistics
summarized the data, providing a clear overview of
cost structures, revenues, and profit margins.
Comparative analysis further identified differences
in value capture among various producer groups
and production stages.
Primary data were gathered through a
combination of semi-structured interviews, focus
THE USA JOURNALS
THE AMERICAN JOURNAL OF AGRICULTURE AND BIOMEDICAL ENGINEERING (ISSN
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2689-1018)
VOLUME 06 ISSUE06
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group discussions (FGDs), and field observations.
Semi-structured interviews were conducted with
key stakeholders, including sugarcane farmers,
local processors, middlemen, and retailers. These
interviews aimed to collect detailed information on
production practices, costs, revenues, and
perceived challenges. Additionally, FGDs were
organized with groups of producers and other
stakeholders to gain insights into common issues
and collaborative solutions. Field observations
were carried out to directly observe the production
process, providing a practical understanding of
Saka production and validating the information
obtained from interviews.
Secondary data collection involved document
analysis and financial records review. Relevant
literature, government reports, and industry
publications were reviewed to contextualize the
findings and support the analysis. Financial
records from producers and processors were
collected and analyzed to determine cost
structures and revenue streams, offering a
quantitative basis for the value-added calculations.
The analysis began with value chain mapping,
identifying key activities and stakeholders from
raw sugarcane cultivation to the final sale of brown
sugar. This mapping facilitated the calculation of
value-added at each production stage by
subtracting input costs from generated revenues,
highlighting the contribution of each stage to the
final product’s valu
e.
Stakeholder analysis was conducted to understand
the distribution of benefits among various
stakeholders. This involved comparing the share of
value-added captured by each stakeholder group
and assessing the economic impact on primary
producers and other stakeholders. Descriptive
statistics summarized the data, providing an
overview of cost structures, revenues, and profit
margins. Comparative analysis was performed to
identify differences in value capture among
different groups of producers and between
production stages.
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To ensure reliability and validity, triangulation of
data from interviews, observations, and financial
records was conducted. Preliminary findings were
shared with local experts and stakeholders for
feedback and validation, enhancing the credibility
of the results. Ethical considerations included
obtaining informed consent from all participants
prior to data collection and maintaining
confidentiality to ensure privacy and ethical
integrity.
Throughout the process, data reliability and
validity were ensured through triangulation,
comparing
information
from
interviews,
observations, and financial records. Preliminary
findings were shared with local experts and
stakeholders for feedback, further validating the
results. Ethical considerations, including informed
consent and confidentiality, were strictly
maintained to protect participant privacy and
ensure the study's ethical integrity. This
comprehensive process provided a detailed
understanding of value-added distribution in the
brown sugar groindustry, informing strategies for
sustainable and equitable growth in the region.
RESULTS
The analysis of the value-added distribution in the
brown sugar (Saka) groindustry revealed
significant disparities among the different stages of
production and stakeholders involved. Primary
producers, primarily sugarcane farmers, were
found to capture a relatively small portion of the
value-added. The average value-added at the
farming stage was approximately 15% of the final
product's price. Local processors, who convert raw
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sugarcane into brown sugar, captured around 25%
of the value-added. Middlemen and retailers
captured the largest share, collectively securing
about 60% of the value-added.
The cost structures varied significantly among
stakeholders. Farmers incurred high input costs for
fertilizers, labor, and transportation, while
processors faced costs related to equipment
maintenance, fuel, and labor. Middlemen and
retailers, despite lower operational costs,
leveraged market access and distribution networks
to capture a larger share of the final product’s
value. This disparity highlights the challenges faced
by primary producers in increasing their share of
the value-added.
DISCUSSION
The results indicate a need for strategic
interventions to enhance value capture by primary
producers. One key factor contributing to the low
share of value-added for farmers is their limited
access to market information and direct sales
channels. This dependency on middlemen reduces
their bargaining power and ability to negotiate
better prices. Additionally, the lack of modern
processing facilities and technology among local
processors limits their efficiency and output
quality, further constraining their ability to capture
higher value.
To address these issues, several recommendations
emerge from the study. First, improving market
access
for
farmers
through
cooperative
frameworks can enhance their bargaining power
and ensure better prices. Establishing cooperatives
can also facilitate collective investment in modern
processing equipment, improving efficiency and
product quality. Training and capacity-building
programs for farmers and processors can further
enhance their skills and knowledge, enabling them
to adopt better practices and technologies.
Moreover, developing direct sales channels, such as
local markets and online platforms, can help
producers capture a larger share of the value-
added by bypassing middlemen. Policymakers and
development agencies can play a crucial role in
supporting these initiatives by providing financial
assistance, infrastructure development, and
regulatory support.
CONCLUSION
The study on value-added distribution in the
brown sugar (Saka) groindustry highlights
significant
disparities
among
different
stakeholders in Bukik Batabuah Village, Canduang
Sub-district, Agam Regency. Primary producers,
who bear the brunt of production costs, receive a
disproportionately small share of the value-added.
This imbalance underscores the need for targeted
interventions to enhance their economic outcomes.
By improving market access, investing in modern
processing technologies, and developing direct
sales channels, primary producers can capture a
more equitable share of the value-added. These
measures, supported by cooperative frameworks
and policy interventions, can promote sustainable
and inclusive growth in the brown sugar
groindustry. Future research could focus on
evaluating the impact of these interventions over
time, providing further insights into the most
effective
strategies
for
improving
value
distribution in traditional agro-industries.
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