Value Chain Analysis of Cigar Waste Utilization as an Alternative Raw Material for the Hand-Rolled Kretek Cigarette (SKT) Industry in Jember Regency, East Java

Abstract

Cigar waste, consisting of leftover leaves, wrapper dust, and stem fragments from tobacco processing, holds potential as an alternative raw material for the hand-rolled kretek cigarette (SKT) industry in Jember Regency, one of Indonesia’s main cigar production centers. This study aims to (i) map the value chain of cigar waste utilization, (ii) identify key technical, institutional, and coordination constraints, and (iii) prioritize policy strategies to support a localized circular economy in the tobacco sector. A mixed qualitative–quantitative approach was employed, combining Porter’s value chain framework for activity and actor mapping, Interpretative Structural Modelling (ISM) for structuring interrelationships among constraints, and the Analytical Hierarchy Process (AHP) for ranking policy alternatives based on expert judgments. The findings show that only about 44% of cigar waste is currently reused in SKT and related agro-industrial processes, while the remainder is sold at low value or discarded. ISM results indicate that institutional performance and coordination occupy the highest positions as independent, system-driving elements, shaping the behaviour of other technical and market constraints. AHP analysis further identifies policy coordination for cigar-waste downstreaming as the most influential strategic option, followed by SME empowerment and data transparency. Rather than offering definitive causal claims, the study provides an exploratory, empirically grounded diagnosis of how cigar-waste flows, actor relations, and governance gaps interact in a specific industrial cluster. The proposed policy options—such as a downstreaming forum, cooperative-based microfinance, and a digital waste inventory—are discussed as context-sensitive scenarios that require further piloting and evaluation.