Indonesian household demand for essential animal proteins and their pattern of price volatility during the Covid-19 season

Abstract

The consumption patterns of Indonesian households are around 85% derived from vegetable proteins and 15% from animal proteins. Furthermore, low-income households often find it challenging to fulfill their energy and protein needs. It is becoming a severe issue when the Covid-19 break in Indonesia and puts many essential animal protein commodities into an excellent uncertainty condition. Although it is accepted that the effectiveness of population growth, none have assessed the relationship with the price volatility that was formed by the Covid-19 issue. This research aims to develop an econometric model on essential animal food demand and how their price volatility trend during Covid-19. The Linear Expenditure System (LES) was chosen as an approach to describing the demand for food commodities from essential animal protein sources using SUSENAS data for the 2019 enumeration period, while the ARCH/GARCH model was used as an approach to describe the pattern of price volatility using set of consumer price data from January 2010 until August 2020 enumeration period. This research shows that the price elasticity of the essential animal protein sources of food commodities shows that all commodities are inelastic. At the same time, changes in the relationship between essential animal food commodities reflect an overall shift in the consumption of society towards essential animal food commodities themselves. On the other hand, there is a specific movement in price volatility toward an explosive term, which led to a great uncertainty that will face both of consumers and producers in the future.