Beef Quota in Indonesia

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To protect the local farmers, GoI imposed quota in 2010, local farmers can sell at the higher price at Qs1, whereas with the price hike and limitation of quota, consumer demand, and supply are adjusted to Qs2. Consumer surplus fell to area B, whereas producer surplus went up a little to area C. The area A is the benefit to importers got licenses to import beef. The area D and E represent deadweight loss (DWL). D is for the inefficiency from local farmers that cannot compete with world price but get benefit from the quota, while area E symbolizes a potential loss of consumer which may afford to buy lower price of beef. Thus, quota only helped the trade importers and a small amount of local farmers. Consumer/population and GoI are the losers. Consumer suffers to buy much higher and fluctuated price while GoI may open the opportunities for corrupt behavior (by bribing officials to sell more licenses) and trade cartel.

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In addition, while achieving beef self-sufficiency is important to reduce the international trade deficit, GoI should also need to review that, except importers and farmers, every party is the loser. The quota only creates corruption, business cartel, and most importantly, it is failed to achieve the intended objective, at the same time, there are a large number of families in Indonesia could not provide meat on the menu. Therefore, I would argue that achieving healthier population is much more important. By providing affordable high protein of food, we would guarantee the quality of our next generation. In that context, I would suggest that GoI should revoke the quota and give more leniency to import the beef, while, provide a short-term subsidy and to train local farmers for efficiency and continue to develop the infrastructure.

References

Idris, M 2016, ‘KPPU Denda 32 Perusahaan Kartel Daging Sapi, tertinggi Rp. 21 Miliar’, Detik.com, 22 April 2016, viewed 20 May 2016

Ministry of Agriculture of the Republic of Indonesia, Outlook Komoditas Pertanian dan Sub-Sektor Peternakan: Daging Sapi, viewed 20 May 2016

Ministry of National Development Planning of the Republic of Indonesia (Bappenas), Study Pendahuluan Rencana Pembangunan Jangka Menengah Nasional (RPJMN) Bidang Pangan dan Pertanian 2015-2019, viewed 20 May 2016

Ningsih, D 2015, ‘Defisit daging sapi 2015 capai 238.000 ton’, Beritasatu.com, 9 September 2015, viewed 20 May 2016

National Bureau of Statistic of the Republic of Indonesia, Agribisnis Usaha Rumah Tangga Budidaya Sapi dan Target Swasembada, viewed 20 May 2016