The Effect of Import Tariff Policy on Indonesian Soybean Consumption and Production

Abstract

This study aims to determine the factors affecting consumption and production ofnational soybean and the effect of soybean import tariff on domestic soybeanconsumption and production. This research was conducted in March - April 2017.The data used in this study is a secondary data in form of annual with a time seriesof 30 years ranged from 1986-2015. The result shows that the import quantity ofsoybean is affected by the variable of exchange rate; soybean consumption andimport tariff. The price of imported soybean and exchange rate significantly affectdomestic soybean price. While domestic soybean price and population significantlyinfluence soybean consumption where a soybean productivity is highly responsiveto wage rates. The simulation result shows that the quantity of imported soybean andsoybean consumption increase with the tariff exemption (T = 0%) compared tocondition when it is applied. Whereas, the domestic soybean price decreases at theexemption of tariffs compared to a condition when it is applied. Our study revealsthat the application of tariffs had no effect on soybean production and productivity.The result of forecasting without alternative tariff imports, which has been analysedduring the next 7 years, shows that in the next few years, Indonesia will not be ableto achieve the self-sufficiency of soybeans.