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The Indonesian Shrimp Industry: Export Performance and Prospects
Dissertation Abstract:
The study assessed the performance and prospects of the Indonesian shrimp industry. Specifically, this study described the growth rates in shrimp production, exports, and market share of Indonesian and other shrimp producing countries, and analyzed the external and internal factors influencing Indonesian shrimp export demand and supply.
The equilibrium and disequilibrium models of demand for and supply oflndonesian shrimp exports were estimated simultaneously using time-series (1971-1991) data.
Shrimp, an important fishery commodity in Indonesia, is mainly exported. It is the largest export earner in the country, accounting for about 75 percent of the total fishery export earnings. Indonesia's shrimp production and exports accounted for 10.3 and 9.5 percent of the world shrimp production and exports, respectively, making Indonesia the second top producer and exporter of shrimps in the world in 1990.
Results of the study revealed that the price (ratio) elasticities of demand were greater than unity, indicating that export demand was highly responsive to the export-world price ratio. On the other hand, the estimated price elasticities of supply were positive, significant, and inelastic in the equilibrium model, but elastic in the disequilibrium model. This shows that shrimp export supply would expand with the increase in the export-domestic price ratio.
The estimated per capita income elasticities of developed countries were greater than one and positive, indicating that Indonesian shrimp export demand was highly responsive to changes in the income of importing countries.
The coefficient of world price of fish was insignificant, indicating that fish does not substitute for shrimps in the world market.
The time variable used to capture the effect of population and consumer preferences had positive and significant coefficients. This finding suggests that Indonesian shrimp export demand increased because of population growth and the growing preference of consumers in developed countries for shrimps. The estimated export supply elasticities with respect to the weighted price of non-shrimp fishery export commodities, were negative and significant. This implies that an increase in the price of non-shrimp fishery commodities would lead to a reduction in the shrimp export supply since the farmers would convert their brackishwater ponds from shrimp production to fish production.
The regression coefficients of the supply shock and the dummy variable for government intensification and extensification programs in shrimp culture were likewise found to have significant and positive effects on the quantity of shrimp exports.
The dummy variable for trawl ban policy had a significant and negative coefficient in the equilibrium shrimp supply model, indicating that trawl ban policy before the implementation of the intensification and extensification programs reduced the Indonesian shrimp exports.
Regression estimates of the shrimp expott supply given the demandside price adjustment model showed that the volume of Indonesian shrimp exports was more influenced by external factors affecting demand such as export and world prices of shrimps, per capita income of developed countries. and time trend. This finding indicates that the Indonesian shrimp industry is a price-taker in the world market. The market prospects of Indonesian shrimps depend on the increase in its price competitiveness, which may be achieved by reducing further its production and marketing costs and ensuring that the quality requirements of importing countries are met and sustained.
Market expansion, diversification of shrimp products through processing, and continuous promotion of Indonesian shrimp products are strongly recommended to improve the country's reputation in foreign markets and subsequently enlarge its share in the world market.