Economic performance of sugarcane cooperatives and their impacts on farmer-members in East Java Province, Indonesia, 2012

East Java is the top producing sugarcane in Indonesia. It contributed around 42% of the total national sugar production or 73% of total java production. Cooperatives are expected to be able to improve sugarcane farmers' welfare. However, up to the present, there is no study that has examined comprehensively the economic performance of sugarcane cooperative enterprises and their impacts on farmer-members. The general objective of the study was to analyze the economic performance of sugarcane cooperatives in East Java Indonesia, and their impacts on the farmer-members. Majority of the sugarcane cooperatives in East Java, both KPTRs and KUDs, had relatively low profitability, indicating low efficiency and overall performance, were liquid, indicating that the cooperatives had enough resources to pay its short-term obligation; however, were not solvent, indicating that the cooperatives did not have enough assets to settle the obligation in the long-run. Furthermore, the cooperatives had diseconomies of scale. However, the existence of some sugarcane cooperatives that had relatively high net surplus indicates a good sign in sugarcane cooperative development in East Java. Financial performance (in terms of net surplus) was affected by category, membership size, and equity of the cooperatives, while economies of scale were affected by output per member, classification, and total assets of the cooperative. Cooperatives' services had positive impacts on sugarcane price, input, efficiency, net farm income, household income, income distribution, and poverty reduction. However, cooperative membership had no significant effect on yield. The following policy recommendations are proposed: 1) cooperative management improvement, 2) strengthening the members' capital share, 3) more attention and support services for small scale sugarcane farmers, 4) improvement of SPTA arrangement and access, and 5) clear arrangement in net surplus and patronage refund distribution.