Evaluating policy options for the mandarin orange industry in indonesia using system dynamics framework
The mandarin orange industry is one of the important fruit sectors in Indonesia. This industry shows a benefit over cost ratio of 1.8 in medium scale cultivation, suggesting a higher economic return. The average annual rate of growth is 25% between 1999 to 2007. However, after 2007 to 2012 the...
Saved in:
| Main Author: | |
|---|---|
| Format: | Thesis |
| Language: | English |
| Published: |
2016
|
| Online Access: | http://psasir.upm.edu.my/id/eprint/66854/1/FEP%202016%2031%20IR.pdf http://psasir.upm.edu.my/id/eprint/66854/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | The mandarin orange industry is one of the important fruit sectors in Indonesia. This
industry shows a benefit over cost ratio of 1.8 in medium scale cultivation, suggesting
a higher economic return. The average annual rate of growth is 25% between 1999 to
2007. However, after 2007 to 2012 there was a significant decline from 2.5 million
tonnes to 1.4 million tonnes. This makes the local production’s ability to meet
mandarin orange consumption reduced from 98% in 1999 to 92% in 2012; while, the
gap was fulfilled by imports. The increase of mandarin orange imports from 27
thousand tonnes to 179 million tonnes from 1999 to 2012 became a government
concern. The government tried to give a stimulus to the local production by issuing
protection policies. These interventions will make a change in the mandarin orange
industry landscape.
The general objective of this study is to evaluate the market protection policies on
mandarin orange industry in Indonesia using system dynamics framework. The specific
objectives are: (i) to examine the relationship between structure and behavior of the
mandarin orange industry in Indonesia, (ii) to assess the impact of the protection
policies on the local production and consumption, and (iii) to simulate the impact of
changes in policy scenarios on the mandarin orange industry.
A mandarin orange system dynamics model was developed to study and understand the
behavior of the mandarin orange industry. The system dynamics methodology was
used because of its ability to accommodate causal relationships, non linearity and
delays that exist in the Indonesian mandarin orange industry. The model was divided
into two main sectors; they were the local and imported mandarin oranges. Each had
production and consumption sub models as inflow and outflow rates. The study also
identified four policy frameworks: the domestic protection policy, stimulus policy,
R&D policy and disease management that includes funding and the improvement of extension agent ratio that decanted into six scenarios. Scenario 1 (S1): referred to
“business as usual” (BAU) scenario, where only the domestic protection policy was
applied; Scenario 2 (S2): the stimulus strategy was added to the policy; Scenario 3
(S3): combination of S2 with R&D policy; Scenario 4 (S4) was a combination of S3
with disease management, including fund and improvement extension agent-area ratio;
Scenario 5 (S5): introduced free market situation where no protection policies were
applied; and Scenario 6 (S6): free market was supported with R&D and disease
management, including fund and improvement extension agent-area ratio.
The results showed that S4 was the best policy alternative, where it was estimated that
the production of oranges may reached 2.9 million tonnes in 2034, relative price value
of 0.8, expected profit of Rp18.638,00/kg and reduction in imports to 43 thousand
tonnes. S6 showed that the removal of the protection policy, supported by R&D and
disease management still increase production to 2.5 million tonnes, relative price 0.77,
expected profit Rp12.623,00/kg and make import lower than BAU with the value of
215 thousand tonnes. This suggests that the protection policy can be gradually reduced
as under an open market the mandarin industry would gain competitiveness through a
strong support of R&D and technology adaption through extension agents and effect of
disease management. |
|---|