Cost and Trend Analysis of Sago Processed Businesses in North Luwu and Palopo City, South Sulawesi Province

Abstract

This study investigates sago-based food processing businesses' cost structure, profitability, and

sustainability trends in North Luwu and Palopo City, South Sulawesi, Indonesia. Despite sago’s

strategic role as a traditional food and a climate-resilient crop, the industry faces declining raw

material availability, low farmer income, and limited technological adoption. Using a combined

qualitative-quantitative descriptive approach, including structured surveys and focus group

discussions (FGDs), this research provides a detailed cost and trend analysis of micro and small-

scale enterprises producing local sago foods such as bagea, dange, and kapurung. The findings

reveal that while these businesses remain economically viable—with R/C ratios above 1.0 and the

dange business reaching 2.1—profitability is constrained by small-scale operations, high input

costs, and inadequate support systems. This study fills a critical research gap by shifting focus from

upstream sago cultivation to downstream enterprise viability, offering a rare empirical insight into

the dynamics of traditional food microenterprises in Indonesia. The novelty of this research lies in

its integrated assessment of cost efficiency, scale potential, and policy implications. It proposes

strategic interventions including modernizing processing technologies, strengthening farmer-

producer linkages, and scaling up through cooperative models. The results provide actionable

recommendations for local governments and agribusiness stakeholders aiming to revitalize

indigenous food sectors. Future research should explore the design of sustainable enterprise

clusters, examine consumer preferences for sago-based products, and evaluate the long-term

impacts of technological and institutional interventions on sago industry resilience.