Analysis of Garlic Commodity Competitiveness and Impact of Government Policy in Indonesia

Abstract

Indonesia's government is currently developing garlic commodities in several areas of highland dry land production centres to reduce dependence on imports (94%) from domestic needs. This paper aims to: (1) analyse the benefits of garlic farming financially (private) and economically (social); (2) analyse the competitiveness of garlic farming, both from the perspective of competitive advantage and comparative advantage; (3) review the impact of government policy on garlic farming system; and (4) formulate incentive policies in garlic development. The analysis method was conducted using the Policy Analysis Matrix (PAM) to see Indonesian garlic's competitive position globally. The study area includes Cianjur Regency, West Java; Karang Anyar, Central Java; Pasuruan, East Java; and East Lombok, West Nusa Tenggara. The analysis results showed that garlic farming is financially profitable, but economically less profitable or not profitable. Garlic farming has a competitive advantage but less or no comparative advantage. The value of DRCR >1 shows that Indonesia does not have a comparative advantage in producing garlic. The policy implication is that if Indonesia continues to reduce dependence on imported garlic, it will require breakthroughs in advanced innovation, integrated regional development, agricultural infrastructure support, institutional strengthening of farmers, and farmers' incentive policies.

Assessing the sustainability of garlic production for determining strategies in Garlic Sustainable Development Program

“…However, the price of garlic is currently decreasing; wet garlic costs between IDR 10,000-15,000 depending on the quality, and seeds are IDR 30-35,000, These prices fall below the breakeven point (BEP) [6], which poses a significant challenge and detriment to farmers. Therefore, that a price stabilization policy is needed so that the selling price of garlic is under the purchasing power of the community but still profitable for farmers to keep planting [4,5,22] Subsidy dependency is also a sensitive factor for sustainability. Government intervention in development programs can help reduce the production costs of garlic farming so that the profits received by farmers are more significant than they should be.…”

“…Garlic consumption per capita for households in 2012 was 1.17 kg/capita/year within a decade, increasing to 1.86 kg/capita/year in 2021. Indonesia's need for garlic is enormous, reaching 592 thousand tons [2], so its supply is a concern for the government because its price increase can cause inflation [3,4]. However, the high IOP Publishing doi:10.1088/1755-1315/1266/1/012040 2 demand for garlic in Indonesia has been met by imports because domestic production is only able to meet about 7% of the demand.…”

“…This endeavor has been sustained through the National Garlic Self-Sufficiency Program, which has remained in effect from 2016 until the present. The program is carried out through the development of regional centres and import regulation [4,5,6]. The target production development program to achieve self-sufficiency requires about 73,000 ha of garlic plantations, with a productivity of 8.35 tons/ha [7,8].…”

“…In addition to inefficient production costs, local garlic is difficult to market due to a lack of consumer interest. Fluctuating prices and a weak marketing system that farmer institutions still need to support have led to low profits received by farmers [4,11]. These price problems and the absence of market guarantees make farmers no longer interested in getting involved in development programs [5,12].…”

Enhancing local garlic industry performance through marketing chain analysis

“…The government is currently attempting to increase garlic production to offset the supply of imported garlic. Since 2013, the Ministry of Agriculture of the Republic of Indonesia has implemented several initiatives to augment local garlic production, ensure a plentiful supply in the domestic market, and diminish reliance on imports [5,11,12]. One concern is how garlic locally produced from production centers in Indonesia has been marketed.…”