The Effects of Environmental Factors on Productivity in Sugar
Industry: A Qualitative Study
Nadia Anridho, Bambang Tjahjadi, Alfiyatul Qomariyah, Sigit Kurnianto
Departement of Accounting, Faculty of Economics and Business, Universitas Airlangga
Surabaya, Indonesia
Keywords: Environmental Factors, Productivity, Sugar Industry
Abstract: Due to global warming, the changing of climate and weather cannot be predicted and influence sugar
production. The aim of this study is to explore whether environmental factors, such as climate, weather, and
geography, influence productivity in Indonesia’s sugar industry. This study employed qualitative method.
The research data were collected through in-depth interview and observation. The informants were 3 (three)
top-level managers of sugar factory. The results showed that environmental factors do influence
productivity. To overcome the constantly changing weather and climate, sugar factories have tried to make
some innovations on its sugarcane seeds. Choosing the right location of sugarcane fields is also one of the
alternative solutions.
1 INTRODUCTION
Sugar is one of the most important food
commodities in Indonesia, because most Indonesians
consume it every day. Indonesia was the second
largest sugar exporter in the world after Cuba in the
1930s. However, along with increasing demand for
sugar in today's society, national sugar industry
cannot keep up with the demand. Furthermore, sugar
mills cannot meet the sugar demand due to the
decrease of national sugar production which causes
an imbalance between sugar supply and demand in
Indonesia. In 2016, the total demand for white
crystal sugar (WCS) was 3 million tons, but sugar
factories in Indonesia were merely able to produce
about 2.6 million tons or about 65% of the total
demand. To fulfil the rest of the demand, the country
imported sugar from other countries. The decline in
national sugar production is caused by several
factors, such as low quality of sugarcanes,
inadequate sugarcane plantations, extreme weather
changes, high demands from farmers, employees'
lack of productivity, government regulations, and so
on. Therefore, it is important for sugar factories to
understand and address the factors affecting its
productivity.
External factors must be considered by sugar
factories if they want to increase their productivity.
External factors, such as politics, economy, social,
technology, law, and environment, become the most
influential factors for the sustainability of sugar mill
business. As Nugraha (2016) explained, poor
weather conditions pose some great difficulties for
farmers in planting sugarcane and cause low
sugarcane yield. Hence, a sugar company might face
some troubles in procuring sugarcanes, especially
ones with good quality. Another thing related to
external factors comes from the development of
technology. Rapid technological developments
present some convenience for sugar factories in
production process. If the company has the latest
technology, then its sugar factory can work more
effectively and efficiently. In addition, factors like
politics and law also need to be considered, because
government policies and laws can either hamper or
smooth sugar factories business. Based on these
issues, it is important to examine how environmental
factors, especially natural ones, affect the
productivity of sugar mills in Indonesia. The aim of
this study is to explore whether environmental
factors, such as climate, weather, and geography,
influence productivity in sugar industry in Indonesia.
2 THEORETICAL BASES
The theory underlying this research was Natural
Resource Dependence Theory (NRDT) (Tashman,
Anridho, N., Tjahjadi, B., Qomariyah, A. and Kurnianto, S.
The Effects of Environmental Factors on Productivity in Sugar Industry: A Qualitative Study.
In Proceedings of the Journal of Contemporar y Accounting and Economics Symposium 2018 on Special Session for Indonesian Study (JCAE 2018) - Contemporary Accounting Studies in
Indonesia, pages 185-188
ISBN: 978-989-758-339-1
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
185

2011). This theory was an advanced development of
Resource Dependence Theory (RDT) (Pfeffer &
Salancik, 1978). RDT disclosed that a company is an
open system that continuously exchanges materials
and information with its surrounding environment.
Hence, resources were related to everything
happening in this world which affects the activities
or outcomes of the company (Bergmann,
Stechemesser, & Guenther, 2016). The sustainability
of company's business depends on its transactions
with its external environment to obtain the necessary
resources (Pfeffer & Salancik, 1978).
In 2011, Tashman developed RDT into NRDT,
because RDT did not address natural environment as
an important resource for corporate resources
(López-Gamero, Molina-Azorín, & Claver-Cortés,
2011). According to Tashman, natural environment
was also a part of a company’s external
environment. Companies, like humans, either
directly or indirectly required air, clean water,
energy, good climate, and other natural resources
(Bergmann, Stechemesser, and Guenther, 2016).
Nature was the source of raw material for all
physical assets (Winn & Pogutz, 2013). According
to NRDT, organizational behavior was not only a
part of the social systems, but also a part of the
natural environment (Tashman, 2011).
3 RESEARCH METHOD
3.1 Research Approach
This study employed qualitative method with
exploratory approach. Crewell (2012) in Sugiono
(2015) noted that qualitative research was used to
deeply explore a phenomenon, not to generalize the
findings into a population.
3.2 Data Collection
This research data was collected through
interviews, observation, and documentation. This
research focused on some sugar factories in East
Java. The location was chosen because more than
85% sugar factories located in Java. Interviews were
conducted with 3 (three) top-level managers from
sugar mills. All interview results were recorded and
later transcribed. The questions for interview were
as follows: (1) how is the productivity in the sugar
factory; (2) do environmental conditions, such as
climate, weather, and geography, affect company
productivity; (3) how do climate and weather change
affect company productivity; (4) what kind of
problems occurred due to weather uncertainty; (5)
how does the company handle those problems; (6)
What are the solutions of this problem; and (7) How
does the company improve its productivity.
3.3 Data Type and Source
The type of data used in this study was qualitative
data. Primary and secondary data were both used in
this study. Primary data referred to the data obtained
directly from the field or place of research
(Nasution, 2012). Primary data were obtained
through in-depth interviews with the managers of
sugar factories in Indonesia, especially Java. The
information needed was related to the relationship
between the external factors surrounding the sugar
factory and its productivity.
Meanwhile, the secondary data were obtained
from reading sources and other sources consisting of
personal letters, diaries, meeting notes, and official
documents from various government agencies and
sugar factories. They were also obtained from
magazines, newsletters, publications from sugar
mills, attachments from official bodies such as
ministries, study results, theses, survey results,
historical studies, and so on. This study used the
secondary data to strengthen the findings and
supplement the information gathered through direct
interviews with managers.
3.4 Data Analysis
The analysis method used was content analysis. This
method was a part of the textual methods (Satori and
Komariah, 2014: 202). Content analysis was used to
analyze data from the recorded and transcribed
interviews. The data analysis performed were data
reduction, data display, and conclusion drawing/
verification; all were done interactively and
continuously until the existing data were thoroughly
saturated (Miles and Huberman in Satori and
Komariah, 2014: 218). Data analysis in this research
went through editing, coding, and meaning-
interpretation (Musfiqon, 2012).
JCAE Symposium 2018 – Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study
186

4 RESEARCH RESULT
This research data was obtained from several in-
depth interviews with 3 (three) top-level managers
from the existing sugar mills in East Java.
Due to erratic global warming, climate change,
and weather transformation, the final products of
sugarcane, as the raw materials of sugar products,
began to change as well. This finding was in line
with Bergmann, Stechemesser, and Guenther’s
(2016) study. Their study noted that climate change
impacted business performance and organizations
whose business seriously suffered from the impacts
of extreme climate change, hence they cannot
generate positive sales growth. Informant # 2
confirmed it, "Last year there was a sugar mill that
did not mill, because of the lack of sugarcane. "
When sugarcane yields are not good, the
productivity of the sugar factory automatically
decline to the extent it cannot operate at all.
Therefore, sugar mills should strive to overcome the
difficulty of obtaining raw materials.
According to informant # 1, "We cannot
overcome weather conditions. [During] some
experiments of drought-resistant varieties, yet it was
[suddenly] raining] and resulting in wet drought
season. During the drought [season], there are
drought-resistant sugarcane varieties. Hence, to
create such varieties, the harvest management has to
follow suit…to decide the harvest time. The theory is
like that. The question is how we set the planting
time. We can certainly predict, for example, next
year after la Nina, there will be the dry season. [So]
we can decide what to do in this dry season. It
should be anticipated, [as it is] in fact, the only
possible treatment for post-harvest…to save the
potential yield of the sugarcanes. "
Bui and de Villiers’s (2017) findings also
revealed that organization’s strategies change in
respond to climate change. Since sugar factories
cannot cope with the climate and weather, the
solution is to develop new varieties of cane that
resist drought, rain, or wet drought. Using the
existing cane varieties may be amplifying the threat
of crop failure. In addition to creating new varieties
of sugarcane, harvest management also needs to
consider harvest time, plant organization, and so
forth.
Informant # 3 further elaborated, "Plants cannot
lie. If [they are] not fertilized, they will be yellowing
and withering. If [they are] given good nutrition,
they will thrive. Therefore, the maintenance factors
came from surveillance and climate, which affect the
production of sugarcane itself. "
Climate maintenance and monitoring factors
need to be addressed. As plants cannot lie, thus, if
they are not fertilized, they will be yellowing and
withering. Yet when they are adequately fertilized,
they will automatically thrive.
Furthermore, the location is also an important
factor which affects sugarcane yield. As asserted by
Informant # 2, "East Java is a contradictory place.
On one hand, there are excess of sugarcane in
Lumajang and Malang. On another hand, there are
shortages elsewhere. The spread of sugarcane
plantations is uneven. "
Distribution of sugarcane locations becomes an
obstacle for some sugar factories. Sugar factories
nearby strategic locations do not experience
production constraints. In contrast, sugar mills
which are not close to raw materials tend to
experience production constraints.
5 CONCLUSIONS
This study aims to determine how environmental
factors affect the productivity of sugar mills in
Indonesia. The findings confirmed Natural Resource
Dependence Theory (Tashman, 2011) which stated
that like humans, companies either directly or
indirectly require air, clean water, energy, good
climate, and other natural resources. Hence, climate
and weather also affect the productivity of sugarcane
mills.
Based on several in-depth interviews with three
sugar mill managers in East Java, several
conclusions can be drawn. First, sugarcane quality
affects the productivity of sugar mills. When
sugarcane yields are poor, the productivity of sugar
mills decreases. Second, weather changes cannot be
avoided. What needs to be done is to develop new
varieties of sugarcane seeds. Third, selecting the
right location for sugarcane plantation is also
essential.
In this study, there are limitations affecting the
results of research. One of which is the narrow focus
on environment as the only external factor affecting
sugar productivity. Future research can conduct
another research by examining the influence of other
external factors, such as politics, economics, socio-
culture, law, and technology.
The results of this study are expected to provide
a reference and expand knowledge about the
influence of the natural environment on the
sustainability of a company's business.
The Effects of Environmental Factors on Productivity in Sugar Industry: A Qualitative Study
187

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