Determinants of relative demand for imported beef and a review of livestock self-sufficiency in Indonesia

Abstract

This paper reviews the challenges facing Indonesia's self-sufficiency programme. It analyses the determinants of change in relative demand for imported beef by using the Vector Error Correction Model (VECM) based on annual data from 1992 to 2010. It also investigates the long-run relationships between relative domestic price and relative import quantity to predict the impact of decreased reliance on imported beef using Impulse Response Functions (IRFs). The results suggest that increased income in Indonesia is associated with increased relative demand for imported beef. A shock in relative import quantity, as a result of a government decision to cut beef import quotas, for example, would have long-term impacts on relative domestic price.