Analysis of Factors Affecting the Import and Consumption of Sugar Cane in Indonesia

Abstract

This study aims to analyze and determine the effect of (1) production, consumption, price and exchange rate on sugar imports in Indonesia (2) import, production and price of sugar on sugar consumption in Indonesia. This type of research is descriptive and associative. While the type of data is documentary data, the data source is secondary data and time series data from 2000 – 2021. The analysis tool is a simultaneous equation model using the Two Stages Least Squared (TSLS) method. The results of the study concluded that (1) sugar production and exchange rate had no significant effect on sugar imports in Indonesia. While sugar consumption and sugar prices have a significant effect on sugar imports in Indonesia (2) sugar imports have a significant effect on sugar consumption in Indonesia. Meanwhile, production and prices have no significant effect on sugar consumption in Indonesia. From the results of the cointegration test using the Unrestricted Cointegration Rank Test (Trace) approach, it was found that there was a long-term relationship or balance between the variables of sugar production, sugar consumption, sugar imports, sugar prices and the exchange rate. Based on these results, the policy that can be suggested is that the Government through the Ministry of Agriculture should issue policies to encourage the expansion of domestic production scale and improve the quality of sugar in order to suppress imports and at the same time control prices, because large imports will harm sugar farmers and also drain foreign exchange reserves.