The crushing licence is an important regulatory tool that allows the office of the sugar commissioner to ensure mills pay their farmers on time. If a mills fails to clear its dues, the sugar commissioner refuses to issue a licence for the next season. Of the nine mills which have been fined, four mills are from Pune, two from Sangli, one from Satara and two are from Solapur.
Seven of the mills are cooperative while two are private. The total quantum of fine amounts to nearly Rs In case mills neither pay the fine nor get a stay from the cooperative minister, they are not issued licences for the next season.
Click here to join our channel indianexpress and stay updated with the latest headlines. In order for the plantation company to concretise its plans, it shifted to short-term lease contracts and brought in cheap and experienced sugar cane workers from elsewhere.
The bioethanol plant to which Ecofuel supplies feedstock began operating in , albeit with lower production levels than originally envisaged because Ecofuel could not yet comply with the required volume of delivery. Various local varieties of sugar cane have been grown by local smallholders in Central Aceh since the mids. Since then, sugar cane has been processed into red sugar for the local and regional market in simple, locally built and owned processing units. As part of a governmental programme to boost biofuel production, in the Indonesian government financed the establishment of a biofuel plant in Central Aceh.
But this bioethanol plant could not compete with the local sugar factories, due to weak management, bureaucratic inefficiency, price distortions of the domestic biofuel market, and a lack of feedstock supply. As a result, the biofuel plant never became operational. Two years later, another attempt to establish an industrial processing plant took place when the Singapore-based company Indo-China Food Industries PTE Ltd began planning to develop a sugar factory.
In , Singaporean investors signed a contract with the Central Aceh district government to invest in a sugar processing plant. In , a joint venture, PT Kamadhenu Ventures Indonesia, was established and by mid, the construction of a sugar factory had begun and land was made available by the local government. The new investors managed to flexibly adapt to the local situation by starting with processing locally produced sugar cane so as not to compete with local production units.
The area was depopulated as a result of strategic evictions and war atrocities during the peak of the civil war from to The old front line separated ethnic Acehnese in the eastern coastal districts, who mainly supported GAM ideology, from native ethnic Gayonese and Javanese migrants in the highlands, who were neutral or in favour of the Indonesian government. Following the war, this depopulated area became a target of post-conflict development schemes aimed at reintegration and rehabilitation.
The central Indonesian government, while trying to attract investors, spent a significant amount of money to introduce high-yield sugar cane varieties and boost smallholder sugar cane expansion. The district and central governments attempted to provide a labour force for the expected investors through resettlement and transmigration programmes oriented towards Gayo and Javanese migrants who had been evicted and lost land during the war.
The district government also tried to provide large tracts of land for the investors by proposing a reduction in state production forest. However, despite policies and programmes from the national and provincial governments to attract foreign and domestic investors, overseas investors pulled out due to the many difficulties they experienced acquiring land in the post-war landscape, and therefore no processing plant was ever constructed.
The programmes enabled local investors to invest in land and simple processing units of the same type as in Central Aceh. Ethnic Gayo elites and bureaucrats profited significantly from these programmes, while former landowners and Acehnese war victims were excluded. Large difficulties were encountered in the introduction of the crops and with regard to access to land and the distribution of benefits.
Meanwhile, traders and small and medium-sized entrepreneurs, army personnel, and government officials from nearby towns and even from North Sumatra and Java did acquire land and started to grow and produce sugar cane for the local and regional market.
Unrefined, red sugar is now produced, by smallholders, for the local and regional market in nearby district capitals Takengon, Simpang Tiga Redelong, and Bireuen and for soy sauce factories in Medan, in North Sumatra province.
The impact for local people was mixed. In the Philippines, the interventions resulted in land leases from smallholders and contract farming arrangements that benefitted mid- and large-scale farmers. The establishment of a partly foreign-owned bioethanol plant was facilitated, but not managed, by the government.
In Central Aceh, initial government investments failed, but foreign, private investment materialised and investors manoeuvred through local mechanisms and by making use of an existing sugar cane market—a process which occurred without much government involvement.
In Bener Meriah, many rural development schemes and government interventions were implemented and the national and district governments tried to convince companies to invest in the area, but following initial agreements and field surveys, foreign and domestic investments did not—in the end—materialise. The government then turned to rural development programmes aimed at growing sugar cane. As a result, government officials and local and regional pro-Indonesian entrepreneurs did profit, while most of the war victims, especially the Acehnese, were left out.
Rather than focusing on international actors, here we will emphasise shifting power dynamics and competing actors at the sub-national level in the course of land investments. A processual approach involves the study of processes rather than of discrete events and separated actions. In our understanding, investments should be studied as trajectories of dealmaking, and understood as extended processes of negotiation and adaptation stretched over time.
In the following, we will outline some basic elements of this processual approach to clarify the social reality of policy and business investments.
We will also explain why this processual approach is relevant for policy. The first concerns an interactional perspective, understanding land deals as arenas of struggle and contestation in which different stakeholders compete over resources and profits Bakker et al. In this competition, the issue of access to resources and the benefits of the intervention is pivotal.
Local actors cannot predict the outcome of such interactive processes; neither can academics, who are also constrained when endeavouring to make absolute statements on rights of access. It is revealing to apply their earlier research—into the implementation of development projects—to investment schemes in agriculture, in order to understand the transformation of original goals into new outcomes and social realities. Again, here we draw on the rich literature on development interventions and improvement schemes, particularly that of researchers who carried out pioneering work on understanding brokers and brokerage Bierschenk et al.
It is revealing to apply this literature on development interventions and improvement schemes to understanding investments and development schemes as interventions.
They are shaped by institutional legacies and historical repertoires that differ at different times and in different places. We thus cannot overlook the mediating role played by national-level institutions and domestic class inequality in determining the actually existing outcomes of agricultural commodity investment.
We focus on the processes of brokerage between state development schemes, market opportunities, investor interests and local smallholders and labourers. She identified five sources of power that privileged domestic actors in their relation to foreign investors: traditional authority, bureaucratic influence, historical accumulation, locally based business knowledge and networks, and control over the development agenda.
These largely correspond with the critical junctures we identified in Isabela and Aceh, as we shall see in the following sections.
A historical 'institutionalist' approach adds to the understanding of why certain investments materialise and others do not and what particular shapes investments take. Fieldwork was spread over a month period in Isabela and the Gayo highlands, and consisted of interviews, participant observation, and data gathering at the village, municipal, and provincial levels.
A survey was also carried out at the village level where the biggest concentration of sugar cane interventions took place. In the research, respondents included women and men, farmers and farm workers, labour contractors, company field staff and officials, traders, local government officials, and representatives of government agencies. Large sugar estates, haciendas , were the basis of wealth for an important part of the Filipino elite—a landed elite that still has strong political influence as well as stakes in many agro-commodity firms.
In , the Philippines was the 10th largest sugar cane producer in the world and second to Thailand among South-East Asian countries Fischer, et al.
While a small proportion is still exported, production is now primarily for the domestic market, given the fast-growing population and rising domestic demand. The Philippines has joined the biofuel production hype with the aim of generating revenue while embarking on clean energy promotion, having become a signatory to the Kyoto Protocol. The country thus sees a future for biofuel use in the country and is now a marginal biofuel producer.
Policies have been put in place to further this objective, most importantly the Republic Act —better known as the Biofuel Act—of It requires the phasing out of harmful gasoline additives and the use of a minimum of 10 per cent bioethanol blend in all gasoline fuel sold and distributed in the country. Joint Administrative Order No. At least two million hectares of the country's lands are targeted for agribusiness production, including crops for biofuel and agroforestry NEDA, Sugar cane is expected to play an important role in this.
In addition, sugar cane planters supported the Biofuel Act in view of the possible reduction of import tariffs on sugar because of the Association of Southeast Asian Nations ASEAN economic integration scheduled for One set of policies aims to increase national sugar production as part of national food security policies. Being heavily dependent on imported sugar, the government issued an ambitious policy in to achieve sugar self-sufficiency by To meet this target, as much as , hectares of new sugar cane area were to be developed, including Bener Meriah in Aceh El Hida, Another set of policies targets sugar cane as a priority crop in an attempt to boost biofuel production by complementing the existing production of palm oil as biofuel.
In the Philippine policy context, downstream oil industry deregulation allows private companies to invest in the biofuel industry. Its clean air policy demands emission reduction and the promotion of biofuels as a cleaner fuel alternative. The government of the Philippines has clearly made an effort to promote biofuel production—also because the country has no oil itself.
The Indonesian policies, on the other hand, got caught in contradictions and never manifested as intended. Reasons for this include conflicting policies for sugar self-sufficiency, a national energy mix, and post-conflict development assistance to facilitate the return of refugees and to involve them in sugar cane production.
However, as we will argue in this section, the specific outcomes of sugar cane interventions have a lot to do with sub-national power dynamics mediated by local elites with strong political and economic interests. The contrasting interests of local actors make straightforward implementation of national policies impossible. In the following section, we follow the processual approach and identify the following junctures: protest and adaptations; bureaucratic support; the change from intended land acquisitions to land leases and contract farming; the establishment of beneficial labour contracts for local residents and the introduction of cheap and efficient labour from elsewhere; control of the development agenda; and the close cooperation between investors and local elites.
In the beginning, the investment received a lukewarm reception in the villages because sugar cane cultivation was new to the locality. To these groups, the establishment of the sugar cane investment violates the land and labour rights of local farmers, not to mention the threats to the environment and local food security Aonishi et al.
Nevertheless, the investment scheme was established and has been operating now for eight years—albeit with deviations along the way. Local government played a crucial role in facilitating the entry of investors and the selection of the municipality of San Mariano as the main location of the investment.
Once the area was identified by the central government, the investors had to deal with local government units. Ecofuel negotiated with provincial- and municipal-level officials in order to gain entry to the villages and identify plantation sites.
The investment scheme received the endorsement of local government units and was hailed as one of the top investments in the province and the biggest active bioethanol project in the country. Village officials agreed to organise assemblies to promote the investment scheme at the village level, but the nature of the project and its possible implications for the community were not explained to the villagers, and nor was their input requested with regards to the introduction of sugar cane into their areas.
The village officials could have played an active role in this. The village assemblies could have been utilised as platforms for dialogue on the acceptability of the investment scheme. Currently, two main types of arrangement are enforced by Ecofuel: lease and contract farming. Lease contract is the dominant scheme implemented by the company. The lease agreement usually covers three years and is renewable for another three years.
The rent ranges from PHP 5,—10, roughly EUR 88— in per hectare per year depending on the distance of the farm from the processing plant. The company takes over the land for the duration of the contract, organising production and recruiting labourers. Moreover, all production risks are born by the farmer, not by the company. The company hired locals as technicians and labour contractors. Company technicians conducted house-to-house visits but only to convince farmers to lease their lands and with very little explanation regarding the terms of the contract.
The farmers needed convincing, so technicians emphasised the possible earnings, the advance rental payment, and advances for production costs to be provided by the company. Using its local personnel to promise incentives to farmers already facing economic constraints was an effective approach for the company.
They were the first to be contacted during plantation development and their lands were used for establishing nurseries. Despite the five-hectare ceiling on land ownership imposed under the agrarian reform programme, there are still landowners who possess at least 20 hectares, with one prominent landowner reportedly owning about a hundred hectares in one village.
During village assemblies, the company officials used the experience of the big landowners in their dealings with Ecofuel to entice small farmers to lease out their lands to the company as well. The contract farming and lease arrangements with big landowners served as a guarantee that the investor could be trusted.
At present, the majority of the lessors and contract growers are small-scale farmers owning less than five hectares. Their areas converted to sugar cane were previously either not utilised, or used as pasture or cultivated for rice, corn, or vegetables. In the first years following the establishment of the scheme, almost all lands were leased for three years and workers were recruited to work on the leased lands.
Labour contractors, on the other hand, were already experienced in pooling farmworkers to work in small groups on rice and corn farms. They could also easily mobilise labourers to work for Ecofuel. Nevertheless, a number of labour contractors recruited labour from traditional sugar-producing provinces in the Philippines beginning in Working for nine months in a year, the farmworkers are hired as migrant labour to perform the harder tasks avoided by the local farmworkers—for example the harvesting of canes and their transport to the processing plant.
It changed its strategy and looked into adjacent municipalities and provinces for possible production areas. Lease and contract farming remained the two schemes offered by the company. In addition, Ecofuel encroached upon existing sugar cane-producing municipalities in neighbouring provinces and started buying sugar cane that was destined for the existing sugar mill in the region.
The competition resulting from the entry of Ecofuel into these markets has been an unpleasant surprise for the existing sugar mill, but the resulting better prices for harvested cane have been welcomed by sugar cane farmers. Members of the elite are able to bend company rules—such as not signing formal contracts or changing the nature of agreements, for instance from contract farming to self-financing.
By comparison, smallholders were not given a choice as to which production arrangements were available to them, nor did they receive advice from local officials about the possible problems they could encounter if they contracted out their lands.
For them, the investments did not bring much benefit. But, true to its market-orientation, the Philippine government limited its role to identifying potential areas of production for large-scale land investments, leaving it up to companies and landowners to negotiate the terms of their engagement, as is the case with Ecofuel. These groups had their own intervention strategies with which to resist the investment.
The company suffered losses due to its equipment being burned by militant groups. Some mobilisations in and involved the uprooting of newly planted canes and the setting up of blockades to stop operations in areas where land ownership was contested. Complaints of violation of environmental regulations were lodged against GFII but the company was only issued with a warning by the environmental management agency.
Ecofuel pulled out from some of its production areas to counter such opposition. Halting operations affected the employment conditions of the local farmworkers. The lands of contract farmers were, in some areas, not maintained, which meant lower cane quality and thus a lower market price. Meanwhile, those campaigning against the investment criticised the inaction of local and national government agencies regarding environmental, labour, and land grabbing complaints lodged against Ecofuel. At these junctures, the interests and agendas of community elites, state actors, and investors came together.
This collaboration Tsing allowed the company to jump-start its operation in the municipality. The investor also managed to control land and labour through its flexible adaptation of production schemes and the labour regime. The investment offered income and employment opportunities to small farming households, but the landed elite profited more through the better deals that they negotiated with the investor.
These sugar cane investments took place in a post-war environment. In this context, complicated land tenure as an outcome of war atrocities, and new provincial and district power reconfigurations following the peace agreement and the local elections, became the two main factors influencing the process of investment in sugar cane and land over time.
In the following section, we look at critical junctures such as governmental and bureaucratic cooperation; control over and contestation regarding the development agenda; available production repertoires and agricultural histories; the control of land and labour; and the role of labourers, migrants, and local business elites. The first location, the Pantan Tau plateau in Central Aceh, 4 has been a sugar cane producing area since the mids.
Pantan Perempusen location 2 and Rime Mulie location 3 , both in Bener Meriah, are situated in the former frontier areas. Tens of hectares of sugar cane existed there just before the war, but all disappeared due to the conflict: war atrocities were rampant in the area.
This not only created a drastic change in the rural landscape but also led to land tenure insecurity after the war. Figure 5. Map of theGayo highlands and areas targeted by sugar cane interventions Indonesia. Last but not least, Pantan Tau is a well-established sugar cane area covering around 8, hectares of low productive sugar cane, which could provide the initial supply to feed the sugar cane processing plant.
In , the Ministry of Industry built a plant to produce bioethanol—from sugar cane molasses—with a production capacity of around 3, litres per day.
The plant cost IDR Its operation would depend on the supply of local sugar cane through free market mechanisms. The plant, however, never became operational since the plan did not work. Thus, farmers continued to process their sugar cane for red sugar rather than selling it to the bioethanol plant, which offers much lower prices.
The investors were interested in investing in a sugar cane processing plant and in sugar cane estates. The MoU stated that the company would invest in the sugar cane processing complex, which would produce sugar, electricity, and ethanol.
This could be expanded to about 10, TCD depending upon the economic viability of such an expansion and the development of sugar cane estates around the factory. While the plant in its initial phase would depend on supplies from local farmers, in order to be able to increase its production capacity in the next operational step the company demanded that the Central Aceh district government allocate at least 10, hectares for a sugar cane plantation.
An additional location was still to be found, which would most likely imply the reduction of production forest areas. Although the company had not yet started the land acquisition process in Uning Gading, rumours regarding the search for land for plasma estate 6 development had spread widely throughout the highlands since late , triggering land speculation and a rush on land.
This process was accomplished in June , and the following month the first stage of construction officially began. Although the construction process was interrupted by a big earthquake, which hit the area in July , it resumed some months later. Factory construction was still in progress at the end of our fieldwork period. The central and district governments, in their attempts to attract investors, therefore made great efforts and spent a significant amount of money to mobilise labourers and investments in crops and to allocate large tracts of land.
In this regard, three interventions have been carried out by the government since the first was labour mobilisation, the second was the introduction of sugar cane, and the third relates to land allocation for sugar cane investments. These interventions were extremely complicated due to the problematic nature of securing the cooperation of local elites; conflicts over development agendas; GAM protests; and securitisation struggles, all of which constitute the key critical junctures in this case.
Interestingly, these families were mostly former Javanese trans migrants who had fled from various parts of Aceh during the war, but none originated from Pantan Perempusen. Thus, rather than prioritising former inhabitants, this programme targeted a group of refugees completely foreign to the area, but loyal to the Indonesian state.
In early , after living in tents for more than a year, the families were provided with modest housing built by the Ministry of Social Affairs.
For this purpose, he allocated 9, hectares in Pantan Perempusen and 4, hectares in Rime Mulie. In addition, a plan to develop an integrated agro-industry in the transmigration area was prepared by the Bupati , all with significant support from the central government notably from the Ministry of Manpower and Transmigration.
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