Abstract
Shallot is a national strategic commodity in Indonesia, but it is development has a fundamental technical, socioeconomic, and policy support problems. Therefore, it is essential to know the competitiveness of shallot in Indonesia and the incentive policy to implement the comparative advantage to become a sustainable competitive advantage. The purposes of this study are to (1) analyze the profitability of shallot farming privately and socially, (2) analyze the competitiveness of shallot farming from a competitive and comparative advantage perspective, (3) review the impact of government policy on shallot farming, and (4) formulate incentive policies in the development of shallot commodities. The empirical results of the Policy Analysis Matrix revealed that shallot farming in production centers in Indonesia has both competitive and comparative advantages. The highest competitive and comparative advantages were found in the dry season in the upland of Malang district with the coefficient values of PCR (Private Cost Ratio) of 0.268–0.508 and DRCR (Domestic Resource Cost Ratio) of 0.208–0.323. The lowest competitive advantage was found in the lowland of East Lombok district in the dry season with a coefficient value of PCR 0.728–0.844. The lowest comparative advantage in the dry season was found in East Lombok district with a DRCR of 0.448, while in the rainy season, it was found in Wonosobo district with a DRCR of 0.522. These results mean that it is more profitable for Indonesia to increase domestic shallot production than to import. Improving shallot competitiveness can be carried out by implementing advanced technology, agricultural infrastructure, capacity building of farmers’ resources, and government incentive policies to increase productivity and competitiveness sustainability.
Highlights
The strengthening of trade liberalization provides new opportunities and new challenges that farmers and businesses must face in the supply chain of agricultural commodities
The highest financial profit was found on the dryland-upland of Malang district (IDR 60.56 million/planting season), while the lowest was on the wetland-lowland of Majalengka district (IDR 10.94 million/planting season)
The highest economic profit was found on the wetland-lowland of Enrekang (IDR 186.84 million/planting season), while the lowest was on the wetlandlowland of Majalengka district (IDR 44.46 million/planting season)
Summary
The strengthening of trade liberalization provides new opportunities and new challenges that farmers and businesses must face in the supply chain of agricultural commodities. Shallot competitiveness in Indonesia liberalization poses severe problems if locally produced shallot cannot compete globally. The previous studies revealed that the competitiveness is determined by the product value chain’s overall performance, both at the local and global levels [4, 5]. It is determined by the ability to create added value through upgrading, strengthening local institutions, and the role of industry stakeholders. At the global level, the inputoutput structure of governance value chains, geographic scope, and management structure is influenced by the leadership of companies and industry organizations. In some agricultural products’ value chains, analysis and progress direction have increasingly oriented to the global market, so the value chain is often referred to as the global value chain (GVC) [6,7,8]
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