Title: Demand for Garlic Imports in Indonesia
Author: Inggarani Ulfa Yovirizka
Affiliations : Master of Economics Program, Faculty of Economics and Business, Universitas Airlangga Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
Garlic is a necessity for Indonesian people as a basic cooking spice and is used for health. Indonesia is categorized as the largest importer of garlic in the world. Garlic imports are caused by high consumption while domestic production is low so it is unable to meet consumer demand. The price of imported garlic is cheaper than domestic garlic, making consumers tend to choose imported garlic. Most of the garlic supply is imported from China. This research aims to examine and analyze the influence of GDP, relative prices, production, consumption and tariffs on demand for garlic imports in the long and short term. The research also aims to analyze the elasticity of demand for garlic imports in Indonesia in the long term and short term. This research uses the Johansen cointegration test and vector error correction model (VECM). Research on demand for garlic imports in Indonesia over a period of 31 years (1985-2016). The data used is time series data. Factors that influence demand for garlic imports in Indonesia in the short term are imports in the previous one and two years, GDP in the previous year and two years, relative prices in the previous year, consumption in the previous one and two years. The long-term relationship of demand for garlic imports in Indonesia is influenced by GDP, relative prices, production, consumption and tariffs. In the long run all variables are more elastic than in the short run. In the short term all variables are inelastic. In the long run all variables are elastic except production which is inelastic and its value tends to be small. Production is a more important concern than the strategy of eliminating imports. The government should help farmers in increasing domestic production through capital financing for farmers, marketing and knowledge. The program to increase domestic garlic production should be carried out in the short term while reducing import numbers.
Keywords: garlic, import, demand
