VALUE ADDITION, PROFITABILITY, AND STRATEGIC DEVELOPMENT OF THE SOUTH SULAWESI SAGO AGRO-INDUSTRY

Muh Taufik (Research Center for Macroeconomics and Finance)
Andi Yulyani Fadwiwati (Research Center for Behavioral and Circular Economics)
Muslimin (Research Center for Behavioral and Circular Economics)
M Basir Nappu (Research Center for Food Crops)
Amiruddin Syam (Research Center for Macroeconomics and Finance)
Sahardi (Research Center for Food Crops)
Wardah Mustafa (Research Center for Horticulture)
Muh Asaad (Research Center for Horticulture)
Sri Bananiek Sugiman (Research Center for Behavioral and Circular Economics)
Syuryawati (Research Center for Food Crops)
Herniwati (Research Center for Food Crops)
Ida Andriani (Research Center for Behavioral and Circular Economics)
Rahmi Hanuddin (Research Center for Horticulture)
Maryam Nurdin (Research Center for Behavioral and Circular Economics)
Arini Putri Hanifa (Research Center for Food Crops)

Gunung Djati Conference Series
Vol. 66 (2026): The International Conference on Perennial Crops 2026

Sago is more than just a crop; it is a strategic asset for food security and a versatile industrial raw material. However, its true economic potential lies in agro-industrial transformation. This study examines how sago processing adds value and supports local livelihoods in North Luwu and Palopo, South Sulawesi. By combining the Hayami method for value-added analysis with partial budgeting and SWOT frameworks, we assessed the profitability of different processing stages and identified a path forward for the industry. Our findings reveal a sharp divide in economic outcomes. While wet and dry processing generate high value-added margins (over 40%), the milling stage remains below 15%. Interestingly, milling is actually the most efficient profit-maker, yielding a rate of 85.71%—far higher than drying or wet processing. This profitability extends to the people on the ground; with an R/C ratio of 1.6, sago processing is a highly viable business. However, a significant income gap persists, with loggers and processors earning roughly 25% more than the landowners who provide the raw material. To move the industry forward, the focus must shift toward farmer-led corporations and better land mapping. By establishing regional sago institutions and investing in infrastructure and human capital, South Sulawesi can move beyond basic milling into high-value derivative industries. These steps are essential to turning sago from a traditional staple into a modern industrial engine for the region.