The Demand for Beef in Indonesia: Implications for Australian Agribusiness

Hutasuhut, Maradoli, Chang, Hui-Shung (Christie), Griffith, Garry, O'Donnell, Chris and Doran, Howard (2002) The Demand for Beef in Indonesia: Implications for Australian Agribusiness. Australian agribusiness review, 10 paper 4: 1-10.

Author Hutasuhut, Maradoli
Chang, Hui-Shung (Christie)
Griffith, Garry
O'Donnell, Chris
Doran, Howard
Title The Demand for Beef in Indonesia: Implications for Australian Agribusiness
Journal name Australian agribusiness review
ISSN 1442-6951
Publication date 2002-08-19
Year available 2002
Volume 10
Issue paper 4
Start page 1
End page 10
Total pages 11
Place of publication Sydney
Publisher Agribusiness Association of Australia
Language eng
Subject 1402 Applied Economics
Abstract Meat consumption, expenditure and socio-demographic data from the 1990, 1993 and 1996 SUSENAS Household Food Expenditure and Consumption Surveys were employed to estimate the demand for meats in Indonesia. The focus was on the Provinces of DKI Jakarta and West Java where about one-fourth of the Indonesian population reside. Statistical and econometric procedures were used to aggregate the 16 meat types recorded in the SUSENAS into four meat groups. They were then used to estimate the Linear Approximation of the Almost Ideal Demand System (LA/AIDS) model, taking into account zero observations and the restriction that budget shares must lie between zero and unity. The demand for Meat Group 1 (dominated by beef) is income-inelastic, whereas that for Meat Group 2 (dominated by commercial and native chicken) is income-elastic. These two groups comprise nearly 95 per cent of all meat purchases. The estimated own-price elasticity of the beef group is -0.92, while that for the chicken group is -1.09. The cross-price elasticities indicate that all the meat groups are substitute goods, as expected. The results suggest that the current focus of the Indonesian government on strengthening the domestic poultry industry is well placed, as the demand for chicken is likely to respond more quickly to income growth than the demand for beef. Further, consumers seem more likely to adapt their consumption patterns to chicken price changes than they will for beef price changes. However, these differences are relatively minor and there is still a major opportunity for Australian agribusiness firms in the cattle and beef sectors to take advantage of the projected rapid growth in Indonesian beef demand

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