Competitiveness Analysis of Indonesian Shrimp Farming: Policy Analysis Matrix (PAM) Approach
COMPETITIVENESS ANALYSIS OF
INDONESIAN SHRIMP FARMING:
POLICY ANALYSIS MATRIX (PAM) APPROACH
SITI MARYAM
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2015
STATEMENT OF THESIS, SOURCE OF INFORMATION
AND COPYRIGHT
I hereby declare that the master thesis entitled “Competitiveness Analysis
of Indonesian Shrimp Farming: Policy Analysis Matrix (PAM) Approach” is my
work with the direction of the Advisory Committee supervision and has not been
submitted to any other universities. Source of information derived or quoted from
works published and unpublished from other authors have been mentioned in the
text and listed in the Bibliography at the end of this master thesis.
I hereby assign the copyright of my master thesis to Bogor Agricultural
University.
Bogor, May 2015
Siti Maryam
H451110521
Copyright transfer due to the collaborative research work with other parties outside the Bogor
Agricultural University should be based on a related agreement.
SUMMARY
SITI MARYAM. Competitiveness Analysis of Indonesian Shrimp Farming:
Policy Analysis Matrix (PAM) Approach. Supervised by RACHMAT
PAMBUDY, ANDRIYONO KILAT ADHI, BERNHARD BRÜMMER and
GABRIELE HÖRSTGEN-SCHWARK.
This study assesses the level of competitiveness and policy impact on the
vannamei shrimp farming through Policy Analysis Matrix (PAM) approach in
Tambak Pinang Gading (TPG), Balai Layanan Usaha Produksi Perikanan
Budidaya Karawang (BLUPPBK), and PT. Surya Windu Kencana (SWK),
respectively located in Lampung, West Java, and East Java. Indicators measured
are competitive and comparative advantages and policy impact to input and
output. Several policy scenarios are made to observe the impact of changes in the
input and output variable on the shrimp farming competitiveness, while sensitivity
analysis is performed to measure the responsiveness of the competitiveness
indicator DRC due to changes in the input and output variable. Objectives of this
research are: 1). To analyze the competitiveness of Indonesian shrimp farming, 2).
To analyze the impact of government policy on the competitiveness of Indonesian
shrimp farming, and 3) To analyze the influence of prospective changes in
policies on the competitiveness of Indonesian shrimp farming.
The result shows that shrimp farming business in TPG-Lampung and
SWK-East Java had competitive and comparative advantages in respect of the less
than one value of PCR and DRC. Yet, BLUPPBK-West Java was found to have
competitive advantage and comparative disadvantage due to the greater than one
value of DRC. Furthermore, government intervention impacts both on the output
and input of the shrimp farming business. Results for indicators of policy impact
to input and output shows that there was still no protection in tradable input.
Later, combination of all applied policies only gave incentive to shrimp farming in
TPG-Lampung and SWK-East Java.
Policy scenarios reveal that abolishment of import duty policy for
imported wheat flour (shrimp feed ingredient) and increasing of shrimp FOB price
have successfully raised the competitive advantages of all shrimp firms observed.
However, increasing of feed price turns out to lessen the competitive advantages
of the shrimp farming business. Hence, policy to decrease input price in shrimp
culture, particularly feed, is considered be applied. Finally, comparative
advantages of shrimp farming business are sensitive due to the changes in the
transportation cost and official exchange rate.
Key words: shrimp farming, competitiveness, policy analysis matrix
RINGKASAN
SITI MARYAM. Analisa Daya Saing Budidaya Udang Indonesia: Pendekatan
Matriks Analisa Kebijakan (PAM). Dibimbing oleh RACHMAT PAMBUDY,
ANDRIYONO KILAT ADHI, BERNHARD BRÜMMER dan GABRIELE
HÖRSTGEN-SCHWARK.
Studi ini memperkirakan tingkat daya saing dan pengaruh kebijakan
terhadap budidaya udang vannamei melalui pendekatan Matriks Analisa
Kebijakan (PAM) di Tambak Pinang Gading (TPG), Balai Layanan Usaha
Produksi Perikanan Budidaya Karawang (BLUPPBK), dan PT. Surya Windu
Kencana (SWK) yang masing-masing berlokasi di Lampung, Jawa Barat, dan
Jawa Timur. Indikator yang diukur antara lain keunggulan kompetitif dan
komparatif serta dampak kebijakan terhadap input dan output. Beberapa skenario
kebijakan dibuat untuk mengamati dampak perubahan input dan output terhadap
daya saing usaha budidaya udang, sementara analisa sensitivitas dilakukan untuk
mengukur kepekaan indikator DRC terhadap perubahan pada variabel input dan
output. Tujuan dari penelitian ini adalah untuk: 1). Menganalisa daya saing
budidaya udang Indonesia, 2). Menganalisa dampak kebijakan pemerintah
terhadap daya saing budidaya udang Indonesia, dan 3). Menganalisa pengaruh
perubahan kebijakan terhadap daya saing budidaya udang Indonesia.
Hasil penelitian menunjukkan bahwa usaha budidaya udang di TPGLampung dan SWK-Jawa Timur memiliki keunggulan kompetitif dan komparatif
yang didasarkan pada nilai PCR dan DRC yang kurang dari satu. Sementara itu
budidaya udang di BLUPPBK-Jawa Barat ternyata hanya memiliki keunggulan
kompetitif saja. Intervensi pemerintah berdampak baik pada input maupun output
dari usaha budidaya udang. Hasil dari indikator dampak kebijakan terhadap input
dan output menunjukkan bahwa belum ada proteksi yang dlakukan terhadap input
tradable. Kombinasi dari keseluruhan pelaksanaan kebijakan hanya memberikan
insentif pada usaha budidaya udang vannamei di TPG-Lampung dan SWK-Jawa
Timur.
Berdasarkan skenario kebijakan yang dilakukan, penghapusan kebijakan
bea impor untuk tepung gandum (bahan pakan udang) dan kenaikan harga FOB
udang akan meningkatkan keunggulan kompetitif budidaya udang. Namun
demikian, kenaikan harga pakan akan menurunkan keunggulan kompetitif
budidaya udang vannamei. Oleh karena itu, penerapan kebijakan yang bertujuan
untuk menurunkan harga input budidaya, khususnya pakan, sangat dibutuhkan.
Selanjutnya, keunggulan komparatif usaha budidaya udang sensitif terhadap
perubahan dalam biaya transportasi dan nilai tukar rupiah.
Kata kunci: budidaya udang, daya saing, matriks analisa kebijakan
© Bogor Agricultural University Right Reserved, 2015
Copyright Reserved
It is prohibited to cite a part or entire of this master thesis without including or
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scientific writing, preparation of reports, critics, or review an issue; and those are
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It is prohibited to announce and reproduce a part or all of this paper in any form
without permission from Bogor Agricultural University.
COMPETITIVENESS ANALYSIS OF
INDONESIAN SHRIMP FARMING:
POLICY ANALYSIS MATRIX (PAM) APPROACH
SITI MARYAM
Thesis
as one of requirements to obtain a degree of
Magister Sains
in
Study Program of Agribusiness
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2015
Examiner Commission on Affairs of Master Thesis Examination:
Dr Ir Suharno, MADev
Thesis Title
Name
NRP
: Competitiveness Analysis of Indonesian Shrimp Farming: Policy
Analysis Matrix (PAM) Approach
: Siti Maryam
: H451110521
Approved
Advisory Committee
Dr Ir Rachmat Pambudy MS
Chairman
Dr Ir Andriyono Kilat Adhi
Member
Prof Dr Bernhard Brümmer
Member
Prof Dr Gabriele Hörstgen-Schwark
Member
Agreed
Coordinator of Major Agribusiness
Prof Dr Ir Rita Nurmalina MS
Examination Date: February 5th 2015
Dean of Graduate School
Dr Ir Dahrul Syah MScAgr
Submission Date:
ACKNOWLEDGMENT
First, all praise to Allah SWT for having made everything possible. I
would like to express my deepest appreciation to all those who have helped and
supported me in finishing this research.
I would like to express my deep gratitude to my supervisors in Bogor
Agricultural University, Dr Ir Rachmat Pambudy, MS and Dr Ir Andriyono Kilat
Adhi for supporting me in finishing this thesis. Moreover, I would give special
gratitude to my supervisors in Göttingen University, Prof Dr Bernhard Brümmer
and Prof Dr Gabriele Hörstgen-Schwark, for guiding and encouraging me so that I
can finish writing this research. I would especially like to thank Prof Dr Rita
Nurmalina, MS and Prof Dr Stephan von Cramon-Taubadel with respect to
Sustainable International Agriculture (SIA), the joint degree program between
Magister Science of Agribusiness, Bogor Agricultural University and Master of
International Agribusiness and Rural Development, Göttingen University. I would
also like to thank Dr Ir Suharno, MADev as examiner commission on affairs of
master thesis examination and Dr Ir Burhanuddin, MM as representative examiner
from study program of Agribusiness.
Furthermore, I would also like to acknowledge with much appreciation to
Siti Nurazizah, Fiddini Alham, Firsty Rahmatia, Doni Nurdiansyah, Dian Eka
Ramadhani, Septi Dwi Maulida, Dedi Anwar Sipayung, M Fuadi, and Harry
Wuwungan for contributions in the data collecting process. I must also
acknowledge Iwan Sutanto (President of Shrimp Club Indonesia), Dr Sukenda
(Owner of Tambak Pinang Gading, Lampung), and Ir Hardi Pitoyo (Coordinator
of PT. Surya Windu Kencana, Banyuwangi) for giving me permission to use the
shrimp data in this research.
For funding my study in Indonesia, I would like to thank Indonesian
Planning and Cooperation of Foreign Affairs (BPKLN). I would also like to say
my sincere gratitude to Directorate General of Higher Education Republic of
Indonesia (DIKTI) and Studium International Georg-August-Universität
Göttingen for funding my study in Germany.
Finally, a huge thank you to all my friends who supported me a lot: Die
Göttinger Zwölf, BDP IPB 42, Nacom-Dahlia, Midori’s, SIA 2012, MSA-SIA
2013, MSA IPB, PPI Göttingen, all my friends in Indonesia and my international
friends in Germany. I am particularly grateful for the support of my family,
Amang, and Bibi. Finally, I dedicate my work to my parents and my sister who
always encourage and support me throughout my study.
Bogor, May 2015
Siti Maryam
CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDICES
LIST OF ABBREVIATIONS
1 INTRODUCTION
Background
Research Problem
Objectives
Research Scope and Limitation
2 LITERATURE REVIEW
Market Overview of World Shrimp
Market Overview of Indonesian Shrimp
Competitiveness Studies on Shrimp in Indonesia
Policy Analysis Matrix Studies on Shrimp in South East Asia
3 FRAMEWORK
Theory of Competitiveness
Agricultural Policy Analysis
Subsidy Policy on Output
Trade Policy on Output
Subsidy Policy on Input
Theory of Policy Analysis Matrix
Social Price
Operational Framework
4 RESEARCH METHOD
Data Collection
Empirical Analysis
Determination of Cost Allocation Methods for Input
Calculation of Social Price for Input and Output
PAM Analysis
Policy Scenario and Sensitivity Analysis
5 RESULTS AND DISCUSSION
Overview of Shrimp Farming in Research Location
Shrimp Farming Profile
Shrimp Farming Business Analysis
Policy Analysis Matrix
Analysis of Benefit-Cost Ratio
Analysis of Competitiveness
Impact of Government Policy
Policy Impact to Output
Policy Impact to Input
Policy Impact to Input and Output
Influence of Prospective Changes in Policies
Policy Scenario
Sensitivity Analysis
6 CONCLUSION AND RECOMMENDATION
vi
vi
vii
viii
1
1
2
3
3
3
3
7
12
13
14
14
16
17
18
19
20
21
21
22
22
23
23
23
26
28
29
29
29
30
32
33
33
35
35
35
36
38
38
39
40
vi
REFERENCES
APPENDICES
BIOGRAPHY
42
47
58
LIST OF TABLES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
World fisheries and aquaculture production, 2007-2012
Major vannamei shrimp production area in Indonesia
Policies regarding shrimp farming business in Indonesia
Classification of commodity price policy
Policy Analysis Matrix
Policy Analysis Matrix (PAM)
Shrimp farming profile in selected firms
Business analysis of vannamei shrimp farming (ha/cycle)
Policy analysis matrix for shrimp farming (IDR/ha/cycle)
Benefit-cost ratio of shrimp farming
Indicator of shrimp farming competitiveness
Indicators of policy impact to output
Indicators of policy impact to input
Indicators of policy impact to input and output
Policy scenario results
Sensitivity analysis results
1
9
12
17
21
26
30
31
32
33
34
35
36
37
39
39
LIST OF FIGURES
1 Dynamics of world shrimp farming production, 1980-2010
2 World shrimp culture by major producing countries, 2005-2013
3 Shrimp price in the USA Port, 2004-2013
4 Shrimp import trend, 2005-2013
5 Shrimp farming development in Indonesia, 1980-2012
6 Vannamei shrimp (left) and tambak for shrimp culture (right)
7 Indonesian shrimp production, 2009-2014*
8 Export quantity and value of Indonesian shrimp, 2004-2013
9 Indonesian shrimp value chain and bottleneck
10 Subsidy policy on output
11 Trade policy on output
12 Subsidy policy on tradable input
13 Subsidy olicy on non-tradable input
14 Operational framework
4
4
5
6
7
8
8
9
10
18
19
19
20
22
vii
LIST OF APPENDICES
1
2
3
4
5
6
7
8
9
10
Social valuation of exchange rate
Social valuation of shrimp
Social valuation of feed
Social valuation of urea (fertilizer)
Social valuation of dolomite (lime)
Social valuation of fuel
Social valuation of electricity
Social price and social budget in selected shrimp farming firms
Policy scenario
Sensitivity analysis
47
48
48
49
49
49
50
51
52
54
viii
LIST OF ABBREVIATIONS
BAU
BLUPPBK
: Bogor Agricultural University
: Balai Layanan Usaha Produksi Perikanan Budidaya
Karawang;
Business Service Center for Aquaculture Production
Karawang
BMTPS
: Bea Masuk Tindakan Pengamanan Sementara;
Safeguard import tariff
CIF
: Cost, Insurance, and Freight
CVD
: Countervailing Duties
DJPB
: Direktorat Jenderal Perikanan Budidaya;
Directorate General of Aquaculture
DKP-Lampung
: Dinas Kelautan dan Perikanan Provinsi Lampung;
Marine and Fisheries Service of Lampung Province
DRC
: Domestic Resource Cost
EPC
: Effective Protection Coefficient
FAO
: Food and Agriculture Organization
FCR
: Food Conversion Ratio
FOB
: Free on Board
FT
: Factor Transfer
IDR
: Indonesian Rupiah
IT
Input Transfer
KADIN
: Kamar Dagang Indonesia;
Indonesian Chamber of Commerce and Industry
KKP
: Kementerian Kelautan dan Perikanan Republik Indonesia;
Ministry of Marine Affairs and Fisheries Republic of
Indonesia (MMF)
kWh
: Kilowatt-hour
NPCI
: Nominal Protection Coefficient Input
NPCO
: Nominal Protection Coefficient Output
NT
: Net Transfer
OECD
: Organization for Economic Co-operation and Development
OT
: Output Transfer
PAM
: Policy Analysis Matrix
PBCR
: Private Benefit-Cost Ratio
PC
: Profitability Coefficient
PCR
: Private Cost Ratio
SBCR
: Social Benefit-Cost Ratio
SRP
: Subsidy Ratio to Producer
STP
: Sekolah Tinggi Perikanan Jakarta;
Fisheries University of Jakarta
SWK
: Surya Windu Kencana
TPG
: Tambak Pinang Gading
UNCOMTRADE : The United Nations Commodity Trade Statistics Database
USAID
: United States Agency for International Development
USD
: United States Dollar
WTO
: World Trade Organization
1
1 INTRODUCTION
Background
Aquaculture appears to be the world’s fastest industry in producing animal
based-food due to the increasing demand for food and rapid expansion of world
population (FAO 2014a). Moreover, another reason is related to the efficient
production aspect in fish farming such as the low feed conversion ratio (FCR1)
and the fast growth rate of fish. Furthermore, in contrast to the stagnant
production of the world capture fishing, the global aquaculture production
increased through years (Table 1). Report from World Bank (2014) stated that by
2030, aquaculture will provide about two-third of world fish consumption.
Table 1 World fisheries and aquaculture production, 2007-2012
2007
2008
2009
2010
Production
(million tons)
Capture
Inland
10.1
10.3
10.5
11.3
Marine
80.7
79.9
79.6
77.8
Total capture
90.8
90.1
90.1
89.1
Aquaculture
Inland
Marine
Total aquaculture
29.9
20.0
49.9
32.4
20.5
52.9
34.3
21.4
55.7
36.8
22.3
59.0
2011
2012
11.1
82.6
93.7
11.6
79.7
91.3
38.7
23.3
62.0
41.9
24.7
66.6
Source: FAO (2014b)
Having advantages as a maritime country, aquaculture production in
Indonesia showed a significant increase, from a production of 3.2 million tons
(2007) to 7.93 million tons (2011), which also contributed for 58.11 percent of
national total fisheries production in 2011 (KKP 2011). For the last several years,
shrimp has been the main exported commodity from fisheries sector. Total value
of shrimp export in 2011 was about 37 percent of Indonesian total value export
from fisheries sector (KKP 2011). Japan and the US were the main export
destination countries with 366 million USD and 665million USD of export value
in 2013, respectively (UNCOMTRADE 2014).
Development of shrimp farming in Indonesia has started since the eyestalk ablation2 in 1980s with black tiger shrimp as the main species cultured. The
production then continues to grow through technology improvement in hatchery,
feed, and tambak3 management (Juarno 2012). Ministry of Marine Affairs and
Fisheries of Republic Indonesia (MMF) reported that shrimp production had
increased from 3.4 tons in 2009 to 4.15 tons in 2012 with 60 percent of the total
production came from white leg shrimp production (KKP 2013a).
1
Quantity (kg) of feed required to produce 1 kg of fish meat
Technique to stimulate female shrimp to develop mature ovaries and spawn by cutting the eye stalk of
shrimp (Aquaculture-ugent, 2002)
3
Tambak is pond with dike which located in coastal area and used for aquaculture, particularly milkfish and
shrimp culture (KBBI, 2014)
2
2
Vannamei shrimp (Litopenaeus vannamei) or whiteleg shrimp which
originates from Pacific Ocean was firstly cultured in Florida in 1973 then spread
around the world, especially in Asia. The major vannamei producer countries are
China, Thailand, Vietnam and Indonesia. Intensive to super-intensive culture
system of vannamei shrimp have been applied to meet the increasing demand of
this commodity (FAO 2014c). Introduction of vannamei shrimp in 2001 has given
positive impact on shrimp production in Indonesia, with East Java, Lampung and
West Java become the three biggest vannamei production provinces. In 2012, East
Java, Lampung and West Java produced 23 percent, 16 percent, and 12 percent,
respectively, of national vannamei production (KKP 2013a).
Researches indicating that Indonesia has competitiveness in shrimp
farming had been conducted by Zaini et al. (2003), Tajerin and Noor (2004), and
Juarno (2012). However, several problems which influence the shrimp
competitiveness have been faced by Indonesian shrimp farmers, i.e. diseases, high
input price, and also low productivity and quality of shrimp. Therefore,
implementation of government policies regarding technical and economical aspect
of shrimp culture has been made. One policy, that is shrimp revitalization
program, is aimed to increase the domestic production by conducting development
in shrimp business system, starting from the production system improvement until
the marketing system. Yet, another policy such as import duty for imported
shrimp feed ingredient is likely to hinder the development of shrimp farming since
around 60 percent of production cost in shrimp farming is spent for feed.
Various established policies in shrimp farming will influence the shrimp
culture in many aspects, particularly the competitiveness. Thus, policy analysis
matrix (PAM) approach which applied in this research would be beneficial in
observing the shrimp competitiveness level and the impact of government policies
on shrimp farming activities. Furthermore, impact of prospective changes in
policies on shrimp farming competitiveness, in the form of policy scenario and
sensitivity analysis, will also be discussed in this research.
Research Problem
As one of the world main shrimp exporters, Indonesia with its shrimp
business not only has several problems (high price of input, diseases) but also
opportunities such as idle land and other natural resources. Therefore, the
government policy implementation is expected to increase the shrimp farming
competitiveness through any improvement in production quantity and quality.
Based on the description, the research questions which should be answered in this
study are:
1. What is the competitiveness level of Indonesian shrimp farming?
2. What is the impact of government policy on the competitiveness of
Indonesian shrimp farming?
3. How prospective changes in policies would influence the competitiveness
of Indonesian shrimp farming?
3
Objectives
1.
2.
3.
Based on the explanation above, the objectives of this research are:
To analyze the competitiveness of Indonesian shrimp farming
To analyze the impact of government policy on the competitiveness of
Indonesian shrimp farming
To analyze the influence of prospective changes in policies on the
competitiveness of Indonesian shrimp farming
Research Scope and Limitation
This study is analyzing the competitiveness and policy impact on
vannamei shrimp farming in Tambak Pinang Gading (TPG) Lampung, Balai
Layanan Usaha Produksi Perikanan Budidaya Karawang (BLUPPBK) West Java,
and PT. Surya Windu Kencana (SWK) East Java using Policy Analysis Matrix.
Indicators measured were competitive and comparative advantages, policy impact
to output, policy impact to input, and policy impact to input and output. Several
policy scenarios are made to observe the impact of changes in the input and output
variable on the shrimp farming competitiveness, while sensitivity analysis is
performed to measure the responsiveness of the competitiveness indicator DRC
due to changes in the input and output variable. However, there are some
limitations of this study. First, primary data source only covered three firms
conducting intensive shrimp farming which did not represent Indonesian shrimp
farming in general. Second, shrimp farming data and policies to be analyzed were
only related to the year 2013.
2 LITERATURE REVIEW
Market Overview of World Shrimp
Aquaculture and capture are two main sources for global shrimp
production. Figure 1 shows that the number of world shrimp production continues
to climb up through years (Valderrama and Anderson 2011). Furthermore, FAO
(2014a) mentioned that the global production of shrimp increased from 1.7
million tons in the early 1980s to 7.2 million tons in 2011, where about 60 percent
of that quantity entered the international market. For decades, captured shrimp had
been the main source of world supply. However, rapid expansion of global shrimp
culture has put aquaculture as the major producer of world traded shrimp for the
last few years. Aquaculture, as the promising food-producing industry,
contributed for almost 60 percent of world shrimp production in 2010 with black
tiger shrimp and vannamei shrimp as the major species cultured.
4
Figure 1 Dynamics of world shrimp farming production, 1980-2010
Source: FAO (2014a)
Yet, unlike the static production of black tiger shrimp, the amount of
vannamei shrimp production continues to rise. The whiteleg shrimp is expected to
contribute for around 70 percent of world total shrimp production in 2013 (GOAL
2012). Moreover, shrimp production from Asia and Latin America continues to
dominate the global supply (Figure 2). Around 67 percent of cultured shrimp is
produced in Asia and about 30 percent is from Latin America. The major
producers of shrimp farming are China, Thailand, Vietnam, Indonesia, India and
Ecuador (FAO-GLOBEFISH 2014; Seaport 2012).
Figure 2 World shrimp culture by major producing countries, 2005-2013
Source: GOAL (2012)
Based on UNCOMTRADE data (2014), Harmonized System (HS) code
2012 classified traded shrimp into four product types, namely fresh shrimp
(HS030627), frozen shrimp (HS030617), prepared shrimp not in airtight container
(HS160521) and other prepared shrimp (HS160529). Shrimp are sold by size
determined by the number of shrimp in one pound. Around 70 percent of global
5
traded shrimp is in frozen raw type. Various forms of this frozen shrimp type
traded internationally are Head On (HO), Head Less (HL), Peeled Deveined TailOn (PDTO), Peeled Deveined Tail-Off (PDTF), Peeled Un-Deveined (PUD), and
other frozen forms (NOAA 2013).
FAO-GLOBEFISH (2014) stated that the current trend of global shrimp
trade is the lower supply and higher price of shrimp. Despite of high export value
of frozen shrimp (HS030617) which reached USD 10.7 Billion in 2012, the value
decreased to USD 10.67 Billion in 2013. MMF mentioned that the EMS (Early
Mortality Syndrome) disease spread in Asia and Latin America in the late 2012
was suspected to be the main reason of the lowered production (KKP 2013b). This
harmful disease caused significant loss to shrimp farmer and also a decline in
shrimp export quantity from Thailand (23.8 percent), Vietnam (19.7 percent), and
China (28.4 percent). Besides, there were also antibiotic issues in Vietnam and
India which triggered the export restriction applied by Japan (VASEP 2012).
Moreover, the rising of input price for shrimp farming and the weaken
currencies in several South Asian and South-East Asian countries continues to
increase the shrimp price. Compared to the year before, the price of imported
shrimp in Japan was 30 percent higher in 2013 (FAO-GLOBEFISH 2014). Later,
USA data stated that imported price for frozen shrimp type Head Less (HL) size
26-30 count per pound in the USA port continues to rise since 2012 (Figure 3).
Figure 3 Shrimp price in the USA Port, 2004-2013
Source: Indexmundi (2014)
The main consumers of shrimp are the USA, Japan and the European
Union (EU). However, as a result of lower supply, the global import value of
frozen shrimp continued on a downward trend, from USD 10.70 trillion (2012) to
USD 10.69 trillion (2013) (UNCOMTRADE 2014). The EU remained as the
world biggest shrimp importer (752.2 thousand tons), followed by the USA (508.5
thousand tons) and Japan (262.1 thousand tons) in 2013. Figure 4 shows the
import trend from the major importing countries of shrimp for the last few years.
6
Figure 4 Shrimp import trend, 2005-2013
Source: FAO-GLOBEFISH (2014)
The WTO agreement on agriculture classified domestic support into three
boxes, namely amber box, blue box, and green box (respectively are described in
Article 6 of the Agriculture Agreement for amber box, Paragraph 5 of Article 6 of
the Agriculture Agreement for blue box, and Annex 2 of the Agriculture
Agreement for green box). Amber box is designed for all trade distorting
subsidies while blue box is amber box with condition created to reduce trade
distortion. Thus, domestic subsidies aimed to support agricultural and rural sector
which also require farmers to limit their production fall under blue box. Finally,
green box measures non-trade distorting or least-distorting supports (WTO 2002,
Lokollo 2007).
Most policies implemented in global shrimp are related to environmental
and food safety issue. Therefore, most policies applied in shrimp farming belong
to the green box of WTO. However, several policies associated with shrimp trade
are also predominantly made and applied. International trade of shrimp is
determined by “big players” in the world shrimp market. Countries with high
demand of shrimp will have power to control the market by establishing policies
which protect their domestic producers and consumers (Leung and Sharma 2001).
Remained as the world biggest importing country of shrimp, the US,
Japan, and the EU set strict requirements for exporting countries, ranging from
food safety and environmental issue to subjects related to tariff. The non-tariff
barriers that have to be passed by the importing countries are requirements on
chemical residue, food safety, certification (including Best Aquaculture Practices),
traceability, eco-labeling, and environmental sustainability (FAO 2014d).
The EU market, particularly, sets high standard for food safety. Product
test and label of cultured shrimp in the exporting countries have to be authorized
by an EU authority to guarantee traceability and no chemical or antibiotics used in
the production (Van Duijn et al. 2012). Furthermore, the Generalized System of
Preferences (GSP), which guaranteed that shrimp exported from developing
countries is imposed lower import duty rates, has been applied in the EU since
1971. The GSP scheme adopted in 2012 had left only 90 beneficiary countries,
including China, Ecuador, India, Indonesia, and Thailand as the shrimp producers.
7
However, the new GSP scheme in 2014 excludes Thailand from beneficiary
countries and sets new tariff of 12 percent (from 4.2 percent) on raw shrimp and
20 percent (from 7 percent) on prepared shrimp (Berenguer 2014).
Similar to the EU shrimp regulation, Japan applies the Food Sanitation Act
to ensure that the imported shrimp is antibiotic free. Furthermore, Japan
established import tariff for prepared shrimp of 4.8 percent in general, 3.2 percent
for GSP countries, and 0 percent for ASEAN countries (ITPC Osaka 2012).
As a response to increase in shrimp imports and decline in shrimp prices,
the US International Trade Commission (USITC) proposed countervailing duties
(CVD) in December 2012 on imported shrimp from seven countries (China,
Ecuador, India, Indonesia, Malaysia, Thailand, and Vietnam) that had been
accused for unfair trade by subsidizing their shrimp industries. The final result
from the USA Department of Commerce (USDOC) in August 2013 stated that
China, Ecuador, India, Malaysia, and Vietnam are proven in receiving subsidies
rates of 18.16 percent, 10.13-13.51 percent, 5.54-6.16 percent, 10.80-54.5 percent,
and 1.15-7.88 percent, respectively, while Indonesia and Thailand exempted from
the CVD since subsidy found in both countries were less than 2 percent or de
minimis (USDOC 2013).
Market Overview of Indonesian Shrimp
In general, shrimp farming in Indonesia is conducted in small scale tambak
with traditional technology. Thus, Indonesian shrimp culture is characterized by
small enterprise, local ownership, low capital, low technology and also low
productivity (Dyspriani 2007). However, shrimp has been set as one of the major
commodities in Indonesian aquaculture industrialization policy for its high
economic value. Around 70 percent of shrimp in Indonesia is produced in
aquaculture. Despite there are several shrimp cultivated in Indonesia, black tiger
shrimp and vannamei shrimp have been the top species cultured ever since. Black
tiger shrimp culture was firstly applied in 1960s, but the increasing production
started after the eye-stalk ablation and other improvements in aquaculture system
and technology in 1980s (Figure 5) (Soebjakto 2013; STP 2013).
Figure 5 Shrimp farming development in Indonesia, 1980-2012
Source: Soebjakto (2013)
8
Diseases have become a serious problem in black tiger shrimp farming so
that the introduction of vannamei shrimp in 2001, which is considered to be more
disease resistant, brought positive impacts in domestic shrimp production.
Furthermore, unlike the black tiger shrimp, vannamei is an open thelycum species
which means that it can be bred artificially and spawned easily in the culture tank.
Thus, shrimp culturist is able to close the life cycle of this shrimp and to conduct
the genetic selection and domestication program which will cut down the expense
of captive broodstock (Briggs et al. 2004). Due to the advantages of breeding and
disease resistance, the whiteleg shrimp gains the international market. Vannamei
shrimp and tambak which is used for shrimp culture in Indonesia are shown in
Figure 6.
Figure 6 Vannamei shrimp (left) and tambak for shrimp culture (right)
Source: Van Duijn et al. (2012); Ramadhani (2013)
MMF data in 2013 showed that there was a rise in shrimp production for
the last few years (Figure 7). Total production of shrimp increased by 49 percent
from the year 2012 to 2013. For this remarkable result, MMF set a shrimp
production target of 699 000 tons for 2014. National vannamei production
climbed to 251 763 tons in 2012, while 162 068 tons or 64 percent of that amount
was exported to international market (KKP 2013c; Soebjakto 2013; DJPB 2014;
IISP 2014; RRI 2014).
Figure 7 Indonesian shrimp production, 2009-2014*
Source: Soebjakto (2013)
9
Several major production areas for vannamei shrimp farming in Indonesia
are East Java, Lampung, West Nusa Tenggara, South Sumatera, and West Java
(Table 2). East Java contribution for national production increased from only 5.7
percent in 2008 to 23 percent in 2012. Despite diseases and management problems
which reduced Lampung cultured production from 2009 to 2012, production of
vannamei shrimp in Lampung escalated to 72 051.08 tons or about 78 percent
from the year before (DKP Lampung 2014, personal interview).
Table 2 Major vannamei shrimp production area in Indonesia
No
1
2
3
4
5
6
Province
East Java
Lampung
West Nusa Tenggara
South Sumatera
West Java
Others
Total
2008
12 040
132 896
27 056
3 451
33 205
208 648
Vannamei shrimp production (Tons)
2009
2010
2011
2012
27 438
34 593
35 058
58 483
58 567
37 357
44 161
40 489
25 130
32 627
43 077
38 525
30 500
30 955
41 309
32 490
3 428
25 353
30 600
29 900
25 906
45 693
52 215
51 876
170 969 206 578 246 420 251 763
Source: KKP (2013a)
Development of Indonesian shrimp export quantity and value is shown in
Figure 8. The export quantity of exported shrimp has been fluctuated through
years. From 2004 to 2006, the export quantity increased as well as the production.
However, tariff barriers which were set by importing countries and global
economic crisis had caused a decline in the export quantity and value of
Indonesian shrimp until the end of 2009. Yet, better global economic situation in
the first quarter of 2010 influenced the world shrimp demand which also
improved the shrimp trade afterward (FAO-GLOBEFISH 2009; FAOGLOBEFISH 2010).
Figure 8 Export quantity and value of Indonesian shrimp, 2004-2013
Source: UNCOMTRADE (2014)
Total quantity of exported shrimp from Indonesia was 147 thousand tons
in 2013. However, about 74 percent of that traded quantity was in frozen form
(UNCOMTRADE 2014). The USA, Japan and the EU are the main destination
countries for Indonesian shrimp. In the year 2013, USA was the major importer
10
for Indonesian frozen shrimp with 62 thousand tons import quantity or 43 percent
share, followed by Japan with 29 thousand tons or 20 percent share and the EU
with 6 thousand tons or 4 percent share (UNCOMTRADE 2014).
Report released by Ministry of Foreign Affairs of the Netherlands (Van
Duijn et al. 2012) indicated that several bottlenecks have been covering shrimp
farming sector in Indonesia (Figure 9). High price of high quality shrimp fry
(seed) and broodstock, high dependence of imported shrimp feed ingredients, and
unregistered medical and chemical product used in the production are main
problems regarding the input. In addition, traditional production techniques which
have been applied by majority of shrimp farmer in Indonesia (around 70 percent)
are needed to be improved since the traditional farming produce for only about 30
percent of national production (Van der pijl 2010 in Van Duijn et al. 2012).
Figure 9 Indonesian shrimp value chain and bottleneck
Source: Van Duijn et al. (2012)
Figure 9 above also illustrates that there are two chains of how shrimp is
collected before it enters the processing and exporting stage: 1). Shrimp is
collected by collectors and middlemen, either directly from the farmers or shrimp
is brought to the agreed collecting point and 2). Shrimp is brought directly to the
processor and exporter from the farming location. Despite middlemen can
maintain the shrimp traceability, shrimp yield collected from this chain is tend to
have low quality regarding hygiene and food safety (EU 2010 in Van Duijn et al.
2012).
As for bottlenecks in shrimp farming, a WTO case study paper written by
Oktaviani and Erwidodo (2005) enlists several recommendations regarding
constraints that have been faced by shrimp grower in Indonesia. Diversification in
shrimp product and market is needed to increase the value added of the product.
Therefore, technical assistances provided by government and international
organizations, such as FAO, become a necessary factor to enhance development in
the shrimp industry. Besides, promoting local or national brand of shrimp product
is also needed.
11
Furthermore, to meet the international safety and quality standards, trading
partners or importer countries (through WTO or not) should help shrimp farmer in
the exporting countries by providing technical assistance, including technology
transfers, equipment, expertise and training, and also trade facilitation. Above all,
government should be able to provide better shrimp business environment and to
promote new shrimp business investment as well (Oktaviani and Erwidodo 2005).
Along with the increasing challenge in national shrimp farming,
government has made and applied policies regarding the technical and economical
side of shrimp culture. Current implemented policy regarding the technical
practice in shrimp farming is shrimp revitalization program which is a part of the
Marine and Fisheries Industrialization Policy. As stated in Peraturan Menteri
Kelautan dan Perikanan Republik Indonesia Nomor PER.27/MEN/2012 and
Keputusan Menteri Kelautan dan Perikanan Republik Indonesia Nomor 7
/KEPMEN-KP/2013, activities in Shrimp Revitalization Program including the
development in shrimp facility and infrastructure, hatchery system (certification),
production system, environmental and disease management system, and business
system (institution, financial capital, investment) as well as the chemical and
biological residue monitoring in shrimp product.
Taken from the WTO terminology, all non-trade distorting subsidies,
including general service (research, disease control, extension and marketing
service, infrastructure) also environmental and regional assistance program fall
under the green box (WTO 2002, Lokollo 2007). Therefore, current domestic
support in shrimp farming which is applied in Indonesia, that is Shrimp
Revitalization Program, is also included in the green box of WTO.
Moreover, trade policies associated with the shrimp farming are input
subsidy, tariff, and import restriction. Report of PATTIRO-USAID (2011)
explained that fertilizer subsidy for agricultural input has been spent since 2006
by setting the maximum retailer price (Harga Eceran Tertinggi or HET) of
subsidized fertilizer and managing the distribution channel. Since the year 2012,
government of Indonesia has set import duty of 20 percent for imported wheat
flour in order to protect domestic industry (Peraturan Menteri Keuangan Republik
Indonesia Nomor 193/PMK.Oll/2012). However, this policy impacts on the
shrimp industry which use wheat flour as raw ingredient in commercial feed
shrimp. The import duty implementation will increase the production cost in
consideration of the major share of shrimp farming production cost is the feed cost
(around 60 percent).
Furthermore, the Indonesian Customs Tariff Book (2012) stated that
import duty of 5 percent is applied for imported frozen shrimp (HS030617), fresh
shrimp (HS030627), and prepared shrimp (HS160521 and HS160529) and Value
Added Tariff (VAT) of 10 percent are applied for frozen and prepared shrimp.
Above all, imported vannamei shrimp are restricted regarding disease prevention
and domestic protection (Peraturan Bersama Menteri Perdagangan Nomor: 52/MDAG/PER/12/2010 dan Menteri Kelautan dan Perikanan Nomor: PB.
02/MEN/2010). Policies regarding shrimp farming and trade in Indonesia are
summarized in Table 3.
12
Table 3 Policies regarding shrimp farming business in Indonesia
No Items
Policies
Descriptions
1
Shrimp
Shrimp Revitalization
Development in shrimp facility and
farming
Program (Revitalisasi
infrastructure, hatchery, production,
Tambak Udang )
environmental and disease
management, business, and residue
monitoring
2
Fertilizer Subsidy
Maximum retailer price (HET)
establishment
3
Fuel
Subsidy
4
Electricity Subsidy
5
Feed
Bea Masuk Tindakan
Import duty of 20 percent for
Pengamanan
imported wheat flour
Sementara (safeguard
import tariff)
6
Shrimp
Import restriction and
Import restriction for vannamei
import duty
shrimp and import duty of 5 percent
for other imported shrimps
Value Added Tariff
VAT of 10 percent for frozen and
(VAT)
prepared shrimp
Competitiveness Studies on Shrimp in Indonesia
Positive trend in shrimp production and export quantity through years
triggered several researches on Indonesian shrimp competitiveness, from
investigating the competitiveness level in small shrimp farming business to
comparing the national level of competitiveness with other countries. A research
by Utomo et al. (2012) which observed the business performance of small scale
vannamei shrimp farming in Gedangan Village, East Java found that the business
was promising and could increase the welfare of shrimp farmer in that area. The
shrimp culture had competitive advantage with Revenue/Cost ratio of 1.3 and
Private Cost Ratio (PCR) value of 0.7.
International shrimp competitiveness research was conducted by Ling et
al. (1999) by using the Domestic Resource Cost (DRC) approach to estimate the
comparative advantage degree in shrimp producing and exporting in several Asian
countries which are: Thailand, Indonesia, Philippines, Malaysia, Vietnam, India,
Bangladesh, Sri Lanka, China, Taiwan. The result of this study showed that the
level of comparative advantage was higher in intensive farming than that in semiintensive and extensive farming. Furthermore, shrimp farming in Sri Lanka,
Thailand and Indonesia relatively had stronger comparative advantage than that in
the remaining countries with RCR (DRC/nominal exchange rate) index of 0.18,
0.24 and 0.31, respectively.
Other studies investigating the Indonesian shrimp competitiveness in the
international market were performed by Tajerin and Noor (2004) and Juarno
(2012). By using Market Share approach and econometrics methods, Indonesian
shrimp was found to be relatively competitive in the world market compared to
Thailand and other exporting countries. National shrimp was also still dominant in
13
Japan and the US market up to the year 2000. Yet, activities regarding cost
efficiency, including cost for marketing and quality enhancement, should
continuously to be done as strategy to improve the shrimp competitiveness
(Tajerin and Noor 2004).
Furthermore, Juarno (2012) who analyzed the factors which influenced the
Indonesian shrimp supply, demand and competitiveness in the world market using
2SLS model, Revealed Comparative Advantage (RCA) index and Constant
Market Share Analysis (CMSA) model, found that Indonesia has comparative
advantage by exporting shrimp to Japan, the US and the EU. However, the CMSA
result showed that the Indonesian export competitiveness was caused by product
and market specific effect, not commodity and market distribution effect which
means that Indonesia needs to be more diversified both in product and market.
Above all, a research comparing shrimp export competitiveness of
Indonesia and Thailand, both to the US with RCA index as the indicator and data
collected from the year 1989 until 2010 showed that the RCA values of Indonesia
were higher than one, reflecting export competitiveness of Indonesian shrimp in
the international market. However, Indonesia remained relatively disadvantaged
compared with Thailand. Thus, improvement in the infrastructure, i.e. shipment
network, packaging, and transportation is needed to strengthen Indonesian shrimp
export competitiveness (Wati et al. 2013).
Policy Analysis Matrix Studies on Shrimp in South East Asia
Since agricultural business activities and government policy cannot be
separated, Pearson et al. (2003) explained that PAM analysis is one approach to
observe the impact of the government policies on agricultural business, or in this
case, on shrimp farming. Studies on shrimp competitiveness in South East Asia
have been found frequently. However, research about competitiveness on shrimp
farming with respect to the government policies has not widely performed.
To determine the level of Vietnam shrimp competitiveness with regard to
the national policy impact, Kiet and Sumalde (2008) compared the intensive and
semi intensive shrimp farming in Mekong River Delta Area in 2005 by using
several methods (RCA or Revealed Comparative Advantage approach, PAM
approach, NSP or Net Social Profitability, NPP or Net Private Profitability, and
sensitivity analysis) to find the effect of changes in factors influencing the
competitiveness. Result of the study showed that Vietnam shrimp has comparative
(DRC=0.12) and competitive advantage (DRC*=0.08) in the world market. Thus,
the comparative advantage is strongly sensitive to the changes of feed price,
exchange rate, shrimp yield, and export price.
PAM study on shrimp which conducted in small scale shrimp farming in
West Nusa Tenggara, Indonesia indicated that the shrimp farming was profitable
and also had comparative and competitive advantages with PCR and DRC value
of 0.36 and 0.64, respectively. However, the shrimp business would be more
profitable if a proper investment were made by government (Zaini et al. 2003).
Competitiveness study of Malaysian brackishwater species performed by Ramzani
et al. (2013) reported that despite the small value of DRC for vannamei shrimp
(0.15), the social prices for production cost were higher than market prices which
14
showed that the shrimp producers acted as taxpayers for total input cost. The
PAM indicator also explained government policy had not protected the shrimp
industry in Malaysia.
Sriboonchitta et al. (2000) conducted a research to measure the shrimp
competitiveness degree in Thailand and other Asian countries (China, India,
Indonesia, Malaysia, Philippines, Taiwan, Thailand, Sri Lanka) using PAM
approach and RCA (Revealed Comparative Advantage). The result showed that
all countries had comparative advantages in producing shrimp. However, since
Thailand was observed to have the lowest cost of production among other
countries, shrimp farming in Thailand was considered to be fully supported by the
government policy.
3 FRAMEWORK
Theories related to this research, namely theory of competitiveness,
agricultural policy, policy analysis matrix, and social price are explained in this
chapter. Moreover, operational framework depicting the comprehensive guide
about this study is illustrated in the last subchapter.
Theory of Competitiveness
High possibility to obtain goods (and services) which cannot be produced
domestically has triggered countries involved in international trade. Moreover,
another reason which underlies countries in joining the trade is to gain profit by
purchasing products from other countries where it costs comparatively less to
produce them. Later, domestic resources related to the production of those high
cost products will be allocated in producing other products which have
competitiveness in the world market (Caballero et al. 2000).
Variation of policy analysis needs, opinions, and objectives for research
results in various concepts and measurements of competitiveness (Bojnec and
Ferto 2009 in Saptana 2010). Thus, the concept of competitiveness may be viewed
in several perspectives, i.e. business and economic. In terms of business
perspective, competitiveness is defined as a business concept used as basic of
many strategic analyses in order to improve firm performance (Lall 2001 in
Saptana 2010).
Regarding the economic perspective, competitiveness concept divided into
two level, namely macroeconomic level or national competitiveness and
microeconomic level or firm competitiveness. Indicators of competitiveness in
macroeconomic level are World Competitiveness Yearbook of IMD, Global
Competitiveness Report of the world Economic Forum, New Economy Report of
OECD, and Productivity and Competitiveness Indicator of the United Kingdom
Government. Furthermore, indicators for microeconomic level are Domestic
Resource Cost, Constant Market Share, Revealed Comparative Advantage, and
Trade Specialization Ratio.
15
The only meaningful concept of competitiveness at national level, as stated
by Porter (1990), is productivity which depends both on the product quality and
the production efficiency. Moreover, Porter created a concept which become
determinants of national competitive advantage, termed Porter Diamond and
consisted of four attributes, those are: 1). Factor conditions, that is the position of
nation in production factors, i.e. skilled labor or infrastructure, 2). Demand
conditions, mean the nature of domestic market for product and service produced
by industry, 3). Related and supporting industries, in respect of their presence or
absence, and 4). Firm strategy, structure, and rivalry, which focus on the condition
regulating how national companies are created, organized, and managed,
including the nature of domestic rivalry. Furthermore, the World Competitiveness
Book published by Institute for Management Development (IMD) defined four
groups of variable indicating national competitiveness, namely economic
performance, government efficiency, business efficiency, and infrastructure
(Arslan and Tathdil 2012).
At firm level, competitiveness is reflected in the ability of a firm to
produce in lower cost and higher quality. Thus, important factors determining firm
competitiveness are quality, cost, and the price level (Düzgün 2007 in Arslan and
Tathdil 2012). Later, Buckley et al. (1988) stated that as countries cannot have
international competitiveness for all commodities, having comparative advantages
in selected products is the only way to gain competitiveness. Therefore, improving
performance of firms is necessary since competitiveness is reflected in the
improvement of profit performance in the long-run. Similar to Buckley, Lall
(2001) in Saptana (2010) defined firm competitiveness as the ability of firm to do
better in sa
INDONESIAN SHRIMP FARMING:
POLICY ANALYSIS MATRIX (PAM) APPROACH
SITI MARYAM
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2015
STATEMENT OF THESIS, SOURCE OF INFORMATION
AND COPYRIGHT
I hereby declare that the master thesis entitled “Competitiveness Analysis
of Indonesian Shrimp Farming: Policy Analysis Matrix (PAM) Approach” is my
work with the direction of the Advisory Committee supervision and has not been
submitted to any other universities. Source of information derived or quoted from
works published and unpublished from other authors have been mentioned in the
text and listed in the Bibliography at the end of this master thesis.
I hereby assign the copyright of my master thesis to Bogor Agricultural
University.
Bogor, May 2015
Siti Maryam
H451110521
Copyright transfer due to the collaborative research work with other parties outside the Bogor
Agricultural University should be based on a related agreement.
SUMMARY
SITI MARYAM. Competitiveness Analysis of Indonesian Shrimp Farming:
Policy Analysis Matrix (PAM) Approach. Supervised by RACHMAT
PAMBUDY, ANDRIYONO KILAT ADHI, BERNHARD BRÜMMER and
GABRIELE HÖRSTGEN-SCHWARK.
This study assesses the level of competitiveness and policy impact on the
vannamei shrimp farming through Policy Analysis Matrix (PAM) approach in
Tambak Pinang Gading (TPG), Balai Layanan Usaha Produksi Perikanan
Budidaya Karawang (BLUPPBK), and PT. Surya Windu Kencana (SWK),
respectively located in Lampung, West Java, and East Java. Indicators measured
are competitive and comparative advantages and policy impact to input and
output. Several policy scenarios are made to observe the impact of changes in the
input and output variable on the shrimp farming competitiveness, while sensitivity
analysis is performed to measure the responsiveness of the competitiveness
indicator DRC due to changes in the input and output variable. Objectives of this
research are: 1). To analyze the competitiveness of Indonesian shrimp farming, 2).
To analyze the impact of government policy on the competitiveness of Indonesian
shrimp farming, and 3) To analyze the influence of prospective changes in
policies on the competitiveness of Indonesian shrimp farming.
The result shows that shrimp farming business in TPG-Lampung and
SWK-East Java had competitive and comparative advantages in respect of the less
than one value of PCR and DRC. Yet, BLUPPBK-West Java was found to have
competitive advantage and comparative disadvantage due to the greater than one
value of DRC. Furthermore, government intervention impacts both on the output
and input of the shrimp farming business. Results for indicators of policy impact
to input and output shows that there was still no protection in tradable input.
Later, combination of all applied policies only gave incentive to shrimp farming in
TPG-Lampung and SWK-East Java.
Policy scenarios reveal that abolishment of import duty policy for
imported wheat flour (shrimp feed ingredient) and increasing of shrimp FOB price
have successfully raised the competitive advantages of all shrimp firms observed.
However, increasing of feed price turns out to lessen the competitive advantages
of the shrimp farming business. Hence, policy to decrease input price in shrimp
culture, particularly feed, is considered be applied. Finally, comparative
advantages of shrimp farming business are sensitive due to the changes in the
transportation cost and official exchange rate.
Key words: shrimp farming, competitiveness, policy analysis matrix
RINGKASAN
SITI MARYAM. Analisa Daya Saing Budidaya Udang Indonesia: Pendekatan
Matriks Analisa Kebijakan (PAM). Dibimbing oleh RACHMAT PAMBUDY,
ANDRIYONO KILAT ADHI, BERNHARD BRÜMMER dan GABRIELE
HÖRSTGEN-SCHWARK.
Studi ini memperkirakan tingkat daya saing dan pengaruh kebijakan
terhadap budidaya udang vannamei melalui pendekatan Matriks Analisa
Kebijakan (PAM) di Tambak Pinang Gading (TPG), Balai Layanan Usaha
Produksi Perikanan Budidaya Karawang (BLUPPBK), dan PT. Surya Windu
Kencana (SWK) yang masing-masing berlokasi di Lampung, Jawa Barat, dan
Jawa Timur. Indikator yang diukur antara lain keunggulan kompetitif dan
komparatif serta dampak kebijakan terhadap input dan output. Beberapa skenario
kebijakan dibuat untuk mengamati dampak perubahan input dan output terhadap
daya saing usaha budidaya udang, sementara analisa sensitivitas dilakukan untuk
mengukur kepekaan indikator DRC terhadap perubahan pada variabel input dan
output. Tujuan dari penelitian ini adalah untuk: 1). Menganalisa daya saing
budidaya udang Indonesia, 2). Menganalisa dampak kebijakan pemerintah
terhadap daya saing budidaya udang Indonesia, dan 3). Menganalisa pengaruh
perubahan kebijakan terhadap daya saing budidaya udang Indonesia.
Hasil penelitian menunjukkan bahwa usaha budidaya udang di TPGLampung dan SWK-Jawa Timur memiliki keunggulan kompetitif dan komparatif
yang didasarkan pada nilai PCR dan DRC yang kurang dari satu. Sementara itu
budidaya udang di BLUPPBK-Jawa Barat ternyata hanya memiliki keunggulan
kompetitif saja. Intervensi pemerintah berdampak baik pada input maupun output
dari usaha budidaya udang. Hasil dari indikator dampak kebijakan terhadap input
dan output menunjukkan bahwa belum ada proteksi yang dlakukan terhadap input
tradable. Kombinasi dari keseluruhan pelaksanaan kebijakan hanya memberikan
insentif pada usaha budidaya udang vannamei di TPG-Lampung dan SWK-Jawa
Timur.
Berdasarkan skenario kebijakan yang dilakukan, penghapusan kebijakan
bea impor untuk tepung gandum (bahan pakan udang) dan kenaikan harga FOB
udang akan meningkatkan keunggulan kompetitif budidaya udang. Namun
demikian, kenaikan harga pakan akan menurunkan keunggulan kompetitif
budidaya udang vannamei. Oleh karena itu, penerapan kebijakan yang bertujuan
untuk menurunkan harga input budidaya, khususnya pakan, sangat dibutuhkan.
Selanjutnya, keunggulan komparatif usaha budidaya udang sensitif terhadap
perubahan dalam biaya transportasi dan nilai tukar rupiah.
Kata kunci: budidaya udang, daya saing, matriks analisa kebijakan
© Bogor Agricultural University Right Reserved, 2015
Copyright Reserved
It is prohibited to cite a part or entire of this master thesis without including or
mentioning the source. Citations are only for purposes of education, research,
scientific writing, preparation of reports, critics, or review an issue; and those are
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It is prohibited to announce and reproduce a part or all of this paper in any form
without permission from Bogor Agricultural University.
COMPETITIVENESS ANALYSIS OF
INDONESIAN SHRIMP FARMING:
POLICY ANALYSIS MATRIX (PAM) APPROACH
SITI MARYAM
Thesis
as one of requirements to obtain a degree of
Magister Sains
in
Study Program of Agribusiness
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2015
Examiner Commission on Affairs of Master Thesis Examination:
Dr Ir Suharno, MADev
Thesis Title
Name
NRP
: Competitiveness Analysis of Indonesian Shrimp Farming: Policy
Analysis Matrix (PAM) Approach
: Siti Maryam
: H451110521
Approved
Advisory Committee
Dr Ir Rachmat Pambudy MS
Chairman
Dr Ir Andriyono Kilat Adhi
Member
Prof Dr Bernhard Brümmer
Member
Prof Dr Gabriele Hörstgen-Schwark
Member
Agreed
Coordinator of Major Agribusiness
Prof Dr Ir Rita Nurmalina MS
Examination Date: February 5th 2015
Dean of Graduate School
Dr Ir Dahrul Syah MScAgr
Submission Date:
ACKNOWLEDGMENT
First, all praise to Allah SWT for having made everything possible. I
would like to express my deepest appreciation to all those who have helped and
supported me in finishing this research.
I would like to express my deep gratitude to my supervisors in Bogor
Agricultural University, Dr Ir Rachmat Pambudy, MS and Dr Ir Andriyono Kilat
Adhi for supporting me in finishing this thesis. Moreover, I would give special
gratitude to my supervisors in Göttingen University, Prof Dr Bernhard Brümmer
and Prof Dr Gabriele Hörstgen-Schwark, for guiding and encouraging me so that I
can finish writing this research. I would especially like to thank Prof Dr Rita
Nurmalina, MS and Prof Dr Stephan von Cramon-Taubadel with respect to
Sustainable International Agriculture (SIA), the joint degree program between
Magister Science of Agribusiness, Bogor Agricultural University and Master of
International Agribusiness and Rural Development, Göttingen University. I would
also like to thank Dr Ir Suharno, MADev as examiner commission on affairs of
master thesis examination and Dr Ir Burhanuddin, MM as representative examiner
from study program of Agribusiness.
Furthermore, I would also like to acknowledge with much appreciation to
Siti Nurazizah, Fiddini Alham, Firsty Rahmatia, Doni Nurdiansyah, Dian Eka
Ramadhani, Septi Dwi Maulida, Dedi Anwar Sipayung, M Fuadi, and Harry
Wuwungan for contributions in the data collecting process. I must also
acknowledge Iwan Sutanto (President of Shrimp Club Indonesia), Dr Sukenda
(Owner of Tambak Pinang Gading, Lampung), and Ir Hardi Pitoyo (Coordinator
of PT. Surya Windu Kencana, Banyuwangi) for giving me permission to use the
shrimp data in this research.
For funding my study in Indonesia, I would like to thank Indonesian
Planning and Cooperation of Foreign Affairs (BPKLN). I would also like to say
my sincere gratitude to Directorate General of Higher Education Republic of
Indonesia (DIKTI) and Studium International Georg-August-Universität
Göttingen for funding my study in Germany.
Finally, a huge thank you to all my friends who supported me a lot: Die
Göttinger Zwölf, BDP IPB 42, Nacom-Dahlia, Midori’s, SIA 2012, MSA-SIA
2013, MSA IPB, PPI Göttingen, all my friends in Indonesia and my international
friends in Germany. I am particularly grateful for the support of my family,
Amang, and Bibi. Finally, I dedicate my work to my parents and my sister who
always encourage and support me throughout my study.
Bogor, May 2015
Siti Maryam
CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDICES
LIST OF ABBREVIATIONS
1 INTRODUCTION
Background
Research Problem
Objectives
Research Scope and Limitation
2 LITERATURE REVIEW
Market Overview of World Shrimp
Market Overview of Indonesian Shrimp
Competitiveness Studies on Shrimp in Indonesia
Policy Analysis Matrix Studies on Shrimp in South East Asia
3 FRAMEWORK
Theory of Competitiveness
Agricultural Policy Analysis
Subsidy Policy on Output
Trade Policy on Output
Subsidy Policy on Input
Theory of Policy Analysis Matrix
Social Price
Operational Framework
4 RESEARCH METHOD
Data Collection
Empirical Analysis
Determination of Cost Allocation Methods for Input
Calculation of Social Price for Input and Output
PAM Analysis
Policy Scenario and Sensitivity Analysis
5 RESULTS AND DISCUSSION
Overview of Shrimp Farming in Research Location
Shrimp Farming Profile
Shrimp Farming Business Analysis
Policy Analysis Matrix
Analysis of Benefit-Cost Ratio
Analysis of Competitiveness
Impact of Government Policy
Policy Impact to Output
Policy Impact to Input
Policy Impact to Input and Output
Influence of Prospective Changes in Policies
Policy Scenario
Sensitivity Analysis
6 CONCLUSION AND RECOMMENDATION
vi
vi
vii
viii
1
1
2
3
3
3
3
7
12
13
14
14
16
17
18
19
20
21
21
22
22
23
23
23
26
28
29
29
29
30
32
33
33
35
35
35
36
38
38
39
40
vi
REFERENCES
APPENDICES
BIOGRAPHY
42
47
58
LIST OF TABLES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
World fisheries and aquaculture production, 2007-2012
Major vannamei shrimp production area in Indonesia
Policies regarding shrimp farming business in Indonesia
Classification of commodity price policy
Policy Analysis Matrix
Policy Analysis Matrix (PAM)
Shrimp farming profile in selected firms
Business analysis of vannamei shrimp farming (ha/cycle)
Policy analysis matrix for shrimp farming (IDR/ha/cycle)
Benefit-cost ratio of shrimp farming
Indicator of shrimp farming competitiveness
Indicators of policy impact to output
Indicators of policy impact to input
Indicators of policy impact to input and output
Policy scenario results
Sensitivity analysis results
1
9
12
17
21
26
30
31
32
33
34
35
36
37
39
39
LIST OF FIGURES
1 Dynamics of world shrimp farming production, 1980-2010
2 World shrimp culture by major producing countries, 2005-2013
3 Shrimp price in the USA Port, 2004-2013
4 Shrimp import trend, 2005-2013
5 Shrimp farming development in Indonesia, 1980-2012
6 Vannamei shrimp (left) and tambak for shrimp culture (right)
7 Indonesian shrimp production, 2009-2014*
8 Export quantity and value of Indonesian shrimp, 2004-2013
9 Indonesian shrimp value chain and bottleneck
10 Subsidy policy on output
11 Trade policy on output
12 Subsidy policy on tradable input
13 Subsidy olicy on non-tradable input
14 Operational framework
4
4
5
6
7
8
8
9
10
18
19
19
20
22
vii
LIST OF APPENDICES
1
2
3
4
5
6
7
8
9
10
Social valuation of exchange rate
Social valuation of shrimp
Social valuation of feed
Social valuation of urea (fertilizer)
Social valuation of dolomite (lime)
Social valuation of fuel
Social valuation of electricity
Social price and social budget in selected shrimp farming firms
Policy scenario
Sensitivity analysis
47
48
48
49
49
49
50
51
52
54
viii
LIST OF ABBREVIATIONS
BAU
BLUPPBK
: Bogor Agricultural University
: Balai Layanan Usaha Produksi Perikanan Budidaya
Karawang;
Business Service Center for Aquaculture Production
Karawang
BMTPS
: Bea Masuk Tindakan Pengamanan Sementara;
Safeguard import tariff
CIF
: Cost, Insurance, and Freight
CVD
: Countervailing Duties
DJPB
: Direktorat Jenderal Perikanan Budidaya;
Directorate General of Aquaculture
DKP-Lampung
: Dinas Kelautan dan Perikanan Provinsi Lampung;
Marine and Fisheries Service of Lampung Province
DRC
: Domestic Resource Cost
EPC
: Effective Protection Coefficient
FAO
: Food and Agriculture Organization
FCR
: Food Conversion Ratio
FOB
: Free on Board
FT
: Factor Transfer
IDR
: Indonesian Rupiah
IT
Input Transfer
KADIN
: Kamar Dagang Indonesia;
Indonesian Chamber of Commerce and Industry
KKP
: Kementerian Kelautan dan Perikanan Republik Indonesia;
Ministry of Marine Affairs and Fisheries Republic of
Indonesia (MMF)
kWh
: Kilowatt-hour
NPCI
: Nominal Protection Coefficient Input
NPCO
: Nominal Protection Coefficient Output
NT
: Net Transfer
OECD
: Organization for Economic Co-operation and Development
OT
: Output Transfer
PAM
: Policy Analysis Matrix
PBCR
: Private Benefit-Cost Ratio
PC
: Profitability Coefficient
PCR
: Private Cost Ratio
SBCR
: Social Benefit-Cost Ratio
SRP
: Subsidy Ratio to Producer
STP
: Sekolah Tinggi Perikanan Jakarta;
Fisheries University of Jakarta
SWK
: Surya Windu Kencana
TPG
: Tambak Pinang Gading
UNCOMTRADE : The United Nations Commodity Trade Statistics Database
USAID
: United States Agency for International Development
USD
: United States Dollar
WTO
: World Trade Organization
1
1 INTRODUCTION
Background
Aquaculture appears to be the world’s fastest industry in producing animal
based-food due to the increasing demand for food and rapid expansion of world
population (FAO 2014a). Moreover, another reason is related to the efficient
production aspect in fish farming such as the low feed conversion ratio (FCR1)
and the fast growth rate of fish. Furthermore, in contrast to the stagnant
production of the world capture fishing, the global aquaculture production
increased through years (Table 1). Report from World Bank (2014) stated that by
2030, aquaculture will provide about two-third of world fish consumption.
Table 1 World fisheries and aquaculture production, 2007-2012
2007
2008
2009
2010
Production
(million tons)
Capture
Inland
10.1
10.3
10.5
11.3
Marine
80.7
79.9
79.6
77.8
Total capture
90.8
90.1
90.1
89.1
Aquaculture
Inland
Marine
Total aquaculture
29.9
20.0
49.9
32.4
20.5
52.9
34.3
21.4
55.7
36.8
22.3
59.0
2011
2012
11.1
82.6
93.7
11.6
79.7
91.3
38.7
23.3
62.0
41.9
24.7
66.6
Source: FAO (2014b)
Having advantages as a maritime country, aquaculture production in
Indonesia showed a significant increase, from a production of 3.2 million tons
(2007) to 7.93 million tons (2011), which also contributed for 58.11 percent of
national total fisheries production in 2011 (KKP 2011). For the last several years,
shrimp has been the main exported commodity from fisheries sector. Total value
of shrimp export in 2011 was about 37 percent of Indonesian total value export
from fisheries sector (KKP 2011). Japan and the US were the main export
destination countries with 366 million USD and 665million USD of export value
in 2013, respectively (UNCOMTRADE 2014).
Development of shrimp farming in Indonesia has started since the eyestalk ablation2 in 1980s with black tiger shrimp as the main species cultured. The
production then continues to grow through technology improvement in hatchery,
feed, and tambak3 management (Juarno 2012). Ministry of Marine Affairs and
Fisheries of Republic Indonesia (MMF) reported that shrimp production had
increased from 3.4 tons in 2009 to 4.15 tons in 2012 with 60 percent of the total
production came from white leg shrimp production (KKP 2013a).
1
Quantity (kg) of feed required to produce 1 kg of fish meat
Technique to stimulate female shrimp to develop mature ovaries and spawn by cutting the eye stalk of
shrimp (Aquaculture-ugent, 2002)
3
Tambak is pond with dike which located in coastal area and used for aquaculture, particularly milkfish and
shrimp culture (KBBI, 2014)
2
2
Vannamei shrimp (Litopenaeus vannamei) or whiteleg shrimp which
originates from Pacific Ocean was firstly cultured in Florida in 1973 then spread
around the world, especially in Asia. The major vannamei producer countries are
China, Thailand, Vietnam and Indonesia. Intensive to super-intensive culture
system of vannamei shrimp have been applied to meet the increasing demand of
this commodity (FAO 2014c). Introduction of vannamei shrimp in 2001 has given
positive impact on shrimp production in Indonesia, with East Java, Lampung and
West Java become the three biggest vannamei production provinces. In 2012, East
Java, Lampung and West Java produced 23 percent, 16 percent, and 12 percent,
respectively, of national vannamei production (KKP 2013a).
Researches indicating that Indonesia has competitiveness in shrimp
farming had been conducted by Zaini et al. (2003), Tajerin and Noor (2004), and
Juarno (2012). However, several problems which influence the shrimp
competitiveness have been faced by Indonesian shrimp farmers, i.e. diseases, high
input price, and also low productivity and quality of shrimp. Therefore,
implementation of government policies regarding technical and economical aspect
of shrimp culture has been made. One policy, that is shrimp revitalization
program, is aimed to increase the domestic production by conducting development
in shrimp business system, starting from the production system improvement until
the marketing system. Yet, another policy such as import duty for imported
shrimp feed ingredient is likely to hinder the development of shrimp farming since
around 60 percent of production cost in shrimp farming is spent for feed.
Various established policies in shrimp farming will influence the shrimp
culture in many aspects, particularly the competitiveness. Thus, policy analysis
matrix (PAM) approach which applied in this research would be beneficial in
observing the shrimp competitiveness level and the impact of government policies
on shrimp farming activities. Furthermore, impact of prospective changes in
policies on shrimp farming competitiveness, in the form of policy scenario and
sensitivity analysis, will also be discussed in this research.
Research Problem
As one of the world main shrimp exporters, Indonesia with its shrimp
business not only has several problems (high price of input, diseases) but also
opportunities such as idle land and other natural resources. Therefore, the
government policy implementation is expected to increase the shrimp farming
competitiveness through any improvement in production quantity and quality.
Based on the description, the research questions which should be answered in this
study are:
1. What is the competitiveness level of Indonesian shrimp farming?
2. What is the impact of government policy on the competitiveness of
Indonesian shrimp farming?
3. How prospective changes in policies would influence the competitiveness
of Indonesian shrimp farming?
3
Objectives
1.
2.
3.
Based on the explanation above, the objectives of this research are:
To analyze the competitiveness of Indonesian shrimp farming
To analyze the impact of government policy on the competitiveness of
Indonesian shrimp farming
To analyze the influence of prospective changes in policies on the
competitiveness of Indonesian shrimp farming
Research Scope and Limitation
This study is analyzing the competitiveness and policy impact on
vannamei shrimp farming in Tambak Pinang Gading (TPG) Lampung, Balai
Layanan Usaha Produksi Perikanan Budidaya Karawang (BLUPPBK) West Java,
and PT. Surya Windu Kencana (SWK) East Java using Policy Analysis Matrix.
Indicators measured were competitive and comparative advantages, policy impact
to output, policy impact to input, and policy impact to input and output. Several
policy scenarios are made to observe the impact of changes in the input and output
variable on the shrimp farming competitiveness, while sensitivity analysis is
performed to measure the responsiveness of the competitiveness indicator DRC
due to changes in the input and output variable. However, there are some
limitations of this study. First, primary data source only covered three firms
conducting intensive shrimp farming which did not represent Indonesian shrimp
farming in general. Second, shrimp farming data and policies to be analyzed were
only related to the year 2013.
2 LITERATURE REVIEW
Market Overview of World Shrimp
Aquaculture and capture are two main sources for global shrimp
production. Figure 1 shows that the number of world shrimp production continues
to climb up through years (Valderrama and Anderson 2011). Furthermore, FAO
(2014a) mentioned that the global production of shrimp increased from 1.7
million tons in the early 1980s to 7.2 million tons in 2011, where about 60 percent
of that quantity entered the international market. For decades, captured shrimp had
been the main source of world supply. However, rapid expansion of global shrimp
culture has put aquaculture as the major producer of world traded shrimp for the
last few years. Aquaculture, as the promising food-producing industry,
contributed for almost 60 percent of world shrimp production in 2010 with black
tiger shrimp and vannamei shrimp as the major species cultured.
4
Figure 1 Dynamics of world shrimp farming production, 1980-2010
Source: FAO (2014a)
Yet, unlike the static production of black tiger shrimp, the amount of
vannamei shrimp production continues to rise. The whiteleg shrimp is expected to
contribute for around 70 percent of world total shrimp production in 2013 (GOAL
2012). Moreover, shrimp production from Asia and Latin America continues to
dominate the global supply (Figure 2). Around 67 percent of cultured shrimp is
produced in Asia and about 30 percent is from Latin America. The major
producers of shrimp farming are China, Thailand, Vietnam, Indonesia, India and
Ecuador (FAO-GLOBEFISH 2014; Seaport 2012).
Figure 2 World shrimp culture by major producing countries, 2005-2013
Source: GOAL (2012)
Based on UNCOMTRADE data (2014), Harmonized System (HS) code
2012 classified traded shrimp into four product types, namely fresh shrimp
(HS030627), frozen shrimp (HS030617), prepared shrimp not in airtight container
(HS160521) and other prepared shrimp (HS160529). Shrimp are sold by size
determined by the number of shrimp in one pound. Around 70 percent of global
5
traded shrimp is in frozen raw type. Various forms of this frozen shrimp type
traded internationally are Head On (HO), Head Less (HL), Peeled Deveined TailOn (PDTO), Peeled Deveined Tail-Off (PDTF), Peeled Un-Deveined (PUD), and
other frozen forms (NOAA 2013).
FAO-GLOBEFISH (2014) stated that the current trend of global shrimp
trade is the lower supply and higher price of shrimp. Despite of high export value
of frozen shrimp (HS030617) which reached USD 10.7 Billion in 2012, the value
decreased to USD 10.67 Billion in 2013. MMF mentioned that the EMS (Early
Mortality Syndrome) disease spread in Asia and Latin America in the late 2012
was suspected to be the main reason of the lowered production (KKP 2013b). This
harmful disease caused significant loss to shrimp farmer and also a decline in
shrimp export quantity from Thailand (23.8 percent), Vietnam (19.7 percent), and
China (28.4 percent). Besides, there were also antibiotic issues in Vietnam and
India which triggered the export restriction applied by Japan (VASEP 2012).
Moreover, the rising of input price for shrimp farming and the weaken
currencies in several South Asian and South-East Asian countries continues to
increase the shrimp price. Compared to the year before, the price of imported
shrimp in Japan was 30 percent higher in 2013 (FAO-GLOBEFISH 2014). Later,
USA data stated that imported price for frozen shrimp type Head Less (HL) size
26-30 count per pound in the USA port continues to rise since 2012 (Figure 3).
Figure 3 Shrimp price in the USA Port, 2004-2013
Source: Indexmundi (2014)
The main consumers of shrimp are the USA, Japan and the European
Union (EU). However, as a result of lower supply, the global import value of
frozen shrimp continued on a downward trend, from USD 10.70 trillion (2012) to
USD 10.69 trillion (2013) (UNCOMTRADE 2014). The EU remained as the
world biggest shrimp importer (752.2 thousand tons), followed by the USA (508.5
thousand tons) and Japan (262.1 thousand tons) in 2013. Figure 4 shows the
import trend from the major importing countries of shrimp for the last few years.
6
Figure 4 Shrimp import trend, 2005-2013
Source: FAO-GLOBEFISH (2014)
The WTO agreement on agriculture classified domestic support into three
boxes, namely amber box, blue box, and green box (respectively are described in
Article 6 of the Agriculture Agreement for amber box, Paragraph 5 of Article 6 of
the Agriculture Agreement for blue box, and Annex 2 of the Agriculture
Agreement for green box). Amber box is designed for all trade distorting
subsidies while blue box is amber box with condition created to reduce trade
distortion. Thus, domestic subsidies aimed to support agricultural and rural sector
which also require farmers to limit their production fall under blue box. Finally,
green box measures non-trade distorting or least-distorting supports (WTO 2002,
Lokollo 2007).
Most policies implemented in global shrimp are related to environmental
and food safety issue. Therefore, most policies applied in shrimp farming belong
to the green box of WTO. However, several policies associated with shrimp trade
are also predominantly made and applied. International trade of shrimp is
determined by “big players” in the world shrimp market. Countries with high
demand of shrimp will have power to control the market by establishing policies
which protect their domestic producers and consumers (Leung and Sharma 2001).
Remained as the world biggest importing country of shrimp, the US,
Japan, and the EU set strict requirements for exporting countries, ranging from
food safety and environmental issue to subjects related to tariff. The non-tariff
barriers that have to be passed by the importing countries are requirements on
chemical residue, food safety, certification (including Best Aquaculture Practices),
traceability, eco-labeling, and environmental sustainability (FAO 2014d).
The EU market, particularly, sets high standard for food safety. Product
test and label of cultured shrimp in the exporting countries have to be authorized
by an EU authority to guarantee traceability and no chemical or antibiotics used in
the production (Van Duijn et al. 2012). Furthermore, the Generalized System of
Preferences (GSP), which guaranteed that shrimp exported from developing
countries is imposed lower import duty rates, has been applied in the EU since
1971. The GSP scheme adopted in 2012 had left only 90 beneficiary countries,
including China, Ecuador, India, Indonesia, and Thailand as the shrimp producers.
7
However, the new GSP scheme in 2014 excludes Thailand from beneficiary
countries and sets new tariff of 12 percent (from 4.2 percent) on raw shrimp and
20 percent (from 7 percent) on prepared shrimp (Berenguer 2014).
Similar to the EU shrimp regulation, Japan applies the Food Sanitation Act
to ensure that the imported shrimp is antibiotic free. Furthermore, Japan
established import tariff for prepared shrimp of 4.8 percent in general, 3.2 percent
for GSP countries, and 0 percent for ASEAN countries (ITPC Osaka 2012).
As a response to increase in shrimp imports and decline in shrimp prices,
the US International Trade Commission (USITC) proposed countervailing duties
(CVD) in December 2012 on imported shrimp from seven countries (China,
Ecuador, India, Indonesia, Malaysia, Thailand, and Vietnam) that had been
accused for unfair trade by subsidizing their shrimp industries. The final result
from the USA Department of Commerce (USDOC) in August 2013 stated that
China, Ecuador, India, Malaysia, and Vietnam are proven in receiving subsidies
rates of 18.16 percent, 10.13-13.51 percent, 5.54-6.16 percent, 10.80-54.5 percent,
and 1.15-7.88 percent, respectively, while Indonesia and Thailand exempted from
the CVD since subsidy found in both countries were less than 2 percent or de
minimis (USDOC 2013).
Market Overview of Indonesian Shrimp
In general, shrimp farming in Indonesia is conducted in small scale tambak
with traditional technology. Thus, Indonesian shrimp culture is characterized by
small enterprise, local ownership, low capital, low technology and also low
productivity (Dyspriani 2007). However, shrimp has been set as one of the major
commodities in Indonesian aquaculture industrialization policy for its high
economic value. Around 70 percent of shrimp in Indonesia is produced in
aquaculture. Despite there are several shrimp cultivated in Indonesia, black tiger
shrimp and vannamei shrimp have been the top species cultured ever since. Black
tiger shrimp culture was firstly applied in 1960s, but the increasing production
started after the eye-stalk ablation and other improvements in aquaculture system
and technology in 1980s (Figure 5) (Soebjakto 2013; STP 2013).
Figure 5 Shrimp farming development in Indonesia, 1980-2012
Source: Soebjakto (2013)
8
Diseases have become a serious problem in black tiger shrimp farming so
that the introduction of vannamei shrimp in 2001, which is considered to be more
disease resistant, brought positive impacts in domestic shrimp production.
Furthermore, unlike the black tiger shrimp, vannamei is an open thelycum species
which means that it can be bred artificially and spawned easily in the culture tank.
Thus, shrimp culturist is able to close the life cycle of this shrimp and to conduct
the genetic selection and domestication program which will cut down the expense
of captive broodstock (Briggs et al. 2004). Due to the advantages of breeding and
disease resistance, the whiteleg shrimp gains the international market. Vannamei
shrimp and tambak which is used for shrimp culture in Indonesia are shown in
Figure 6.
Figure 6 Vannamei shrimp (left) and tambak for shrimp culture (right)
Source: Van Duijn et al. (2012); Ramadhani (2013)
MMF data in 2013 showed that there was a rise in shrimp production for
the last few years (Figure 7). Total production of shrimp increased by 49 percent
from the year 2012 to 2013. For this remarkable result, MMF set a shrimp
production target of 699 000 tons for 2014. National vannamei production
climbed to 251 763 tons in 2012, while 162 068 tons or 64 percent of that amount
was exported to international market (KKP 2013c; Soebjakto 2013; DJPB 2014;
IISP 2014; RRI 2014).
Figure 7 Indonesian shrimp production, 2009-2014*
Source: Soebjakto (2013)
9
Several major production areas for vannamei shrimp farming in Indonesia
are East Java, Lampung, West Nusa Tenggara, South Sumatera, and West Java
(Table 2). East Java contribution for national production increased from only 5.7
percent in 2008 to 23 percent in 2012. Despite diseases and management problems
which reduced Lampung cultured production from 2009 to 2012, production of
vannamei shrimp in Lampung escalated to 72 051.08 tons or about 78 percent
from the year before (DKP Lampung 2014, personal interview).
Table 2 Major vannamei shrimp production area in Indonesia
No
1
2
3
4
5
6
Province
East Java
Lampung
West Nusa Tenggara
South Sumatera
West Java
Others
Total
2008
12 040
132 896
27 056
3 451
33 205
208 648
Vannamei shrimp production (Tons)
2009
2010
2011
2012
27 438
34 593
35 058
58 483
58 567
37 357
44 161
40 489
25 130
32 627
43 077
38 525
30 500
30 955
41 309
32 490
3 428
25 353
30 600
29 900
25 906
45 693
52 215
51 876
170 969 206 578 246 420 251 763
Source: KKP (2013a)
Development of Indonesian shrimp export quantity and value is shown in
Figure 8. The export quantity of exported shrimp has been fluctuated through
years. From 2004 to 2006, the export quantity increased as well as the production.
However, tariff barriers which were set by importing countries and global
economic crisis had caused a decline in the export quantity and value of
Indonesian shrimp until the end of 2009. Yet, better global economic situation in
the first quarter of 2010 influenced the world shrimp demand which also
improved the shrimp trade afterward (FAO-GLOBEFISH 2009; FAOGLOBEFISH 2010).
Figure 8 Export quantity and value of Indonesian shrimp, 2004-2013
Source: UNCOMTRADE (2014)
Total quantity of exported shrimp from Indonesia was 147 thousand tons
in 2013. However, about 74 percent of that traded quantity was in frozen form
(UNCOMTRADE 2014). The USA, Japan and the EU are the main destination
countries for Indonesian shrimp. In the year 2013, USA was the major importer
10
for Indonesian frozen shrimp with 62 thousand tons import quantity or 43 percent
share, followed by Japan with 29 thousand tons or 20 percent share and the EU
with 6 thousand tons or 4 percent share (UNCOMTRADE 2014).
Report released by Ministry of Foreign Affairs of the Netherlands (Van
Duijn et al. 2012) indicated that several bottlenecks have been covering shrimp
farming sector in Indonesia (Figure 9). High price of high quality shrimp fry
(seed) and broodstock, high dependence of imported shrimp feed ingredients, and
unregistered medical and chemical product used in the production are main
problems regarding the input. In addition, traditional production techniques which
have been applied by majority of shrimp farmer in Indonesia (around 70 percent)
are needed to be improved since the traditional farming produce for only about 30
percent of national production (Van der pijl 2010 in Van Duijn et al. 2012).
Figure 9 Indonesian shrimp value chain and bottleneck
Source: Van Duijn et al. (2012)
Figure 9 above also illustrates that there are two chains of how shrimp is
collected before it enters the processing and exporting stage: 1). Shrimp is
collected by collectors and middlemen, either directly from the farmers or shrimp
is brought to the agreed collecting point and 2). Shrimp is brought directly to the
processor and exporter from the farming location. Despite middlemen can
maintain the shrimp traceability, shrimp yield collected from this chain is tend to
have low quality regarding hygiene and food safety (EU 2010 in Van Duijn et al.
2012).
As for bottlenecks in shrimp farming, a WTO case study paper written by
Oktaviani and Erwidodo (2005) enlists several recommendations regarding
constraints that have been faced by shrimp grower in Indonesia. Diversification in
shrimp product and market is needed to increase the value added of the product.
Therefore, technical assistances provided by government and international
organizations, such as FAO, become a necessary factor to enhance development in
the shrimp industry. Besides, promoting local or national brand of shrimp product
is also needed.
11
Furthermore, to meet the international safety and quality standards, trading
partners or importer countries (through WTO or not) should help shrimp farmer in
the exporting countries by providing technical assistance, including technology
transfers, equipment, expertise and training, and also trade facilitation. Above all,
government should be able to provide better shrimp business environment and to
promote new shrimp business investment as well (Oktaviani and Erwidodo 2005).
Along with the increasing challenge in national shrimp farming,
government has made and applied policies regarding the technical and economical
side of shrimp culture. Current implemented policy regarding the technical
practice in shrimp farming is shrimp revitalization program which is a part of the
Marine and Fisheries Industrialization Policy. As stated in Peraturan Menteri
Kelautan dan Perikanan Republik Indonesia Nomor PER.27/MEN/2012 and
Keputusan Menteri Kelautan dan Perikanan Republik Indonesia Nomor 7
/KEPMEN-KP/2013, activities in Shrimp Revitalization Program including the
development in shrimp facility and infrastructure, hatchery system (certification),
production system, environmental and disease management system, and business
system (institution, financial capital, investment) as well as the chemical and
biological residue monitoring in shrimp product.
Taken from the WTO terminology, all non-trade distorting subsidies,
including general service (research, disease control, extension and marketing
service, infrastructure) also environmental and regional assistance program fall
under the green box (WTO 2002, Lokollo 2007). Therefore, current domestic
support in shrimp farming which is applied in Indonesia, that is Shrimp
Revitalization Program, is also included in the green box of WTO.
Moreover, trade policies associated with the shrimp farming are input
subsidy, tariff, and import restriction. Report of PATTIRO-USAID (2011)
explained that fertilizer subsidy for agricultural input has been spent since 2006
by setting the maximum retailer price (Harga Eceran Tertinggi or HET) of
subsidized fertilizer and managing the distribution channel. Since the year 2012,
government of Indonesia has set import duty of 20 percent for imported wheat
flour in order to protect domestic industry (Peraturan Menteri Keuangan Republik
Indonesia Nomor 193/PMK.Oll/2012). However, this policy impacts on the
shrimp industry which use wheat flour as raw ingredient in commercial feed
shrimp. The import duty implementation will increase the production cost in
consideration of the major share of shrimp farming production cost is the feed cost
(around 60 percent).
Furthermore, the Indonesian Customs Tariff Book (2012) stated that
import duty of 5 percent is applied for imported frozen shrimp (HS030617), fresh
shrimp (HS030627), and prepared shrimp (HS160521 and HS160529) and Value
Added Tariff (VAT) of 10 percent are applied for frozen and prepared shrimp.
Above all, imported vannamei shrimp are restricted regarding disease prevention
and domestic protection (Peraturan Bersama Menteri Perdagangan Nomor: 52/MDAG/PER/12/2010 dan Menteri Kelautan dan Perikanan Nomor: PB.
02/MEN/2010). Policies regarding shrimp farming and trade in Indonesia are
summarized in Table 3.
12
Table 3 Policies regarding shrimp farming business in Indonesia
No Items
Policies
Descriptions
1
Shrimp
Shrimp Revitalization
Development in shrimp facility and
farming
Program (Revitalisasi
infrastructure, hatchery, production,
Tambak Udang )
environmental and disease
management, business, and residue
monitoring
2
Fertilizer Subsidy
Maximum retailer price (HET)
establishment
3
Fuel
Subsidy
4
Electricity Subsidy
5
Feed
Bea Masuk Tindakan
Import duty of 20 percent for
Pengamanan
imported wheat flour
Sementara (safeguard
import tariff)
6
Shrimp
Import restriction and
Import restriction for vannamei
import duty
shrimp and import duty of 5 percent
for other imported shrimps
Value Added Tariff
VAT of 10 percent for frozen and
(VAT)
prepared shrimp
Competitiveness Studies on Shrimp in Indonesia
Positive trend in shrimp production and export quantity through years
triggered several researches on Indonesian shrimp competitiveness, from
investigating the competitiveness level in small shrimp farming business to
comparing the national level of competitiveness with other countries. A research
by Utomo et al. (2012) which observed the business performance of small scale
vannamei shrimp farming in Gedangan Village, East Java found that the business
was promising and could increase the welfare of shrimp farmer in that area. The
shrimp culture had competitive advantage with Revenue/Cost ratio of 1.3 and
Private Cost Ratio (PCR) value of 0.7.
International shrimp competitiveness research was conducted by Ling et
al. (1999) by using the Domestic Resource Cost (DRC) approach to estimate the
comparative advantage degree in shrimp producing and exporting in several Asian
countries which are: Thailand, Indonesia, Philippines, Malaysia, Vietnam, India,
Bangladesh, Sri Lanka, China, Taiwan. The result of this study showed that the
level of comparative advantage was higher in intensive farming than that in semiintensive and extensive farming. Furthermore, shrimp farming in Sri Lanka,
Thailand and Indonesia relatively had stronger comparative advantage than that in
the remaining countries with RCR (DRC/nominal exchange rate) index of 0.18,
0.24 and 0.31, respectively.
Other studies investigating the Indonesian shrimp competitiveness in the
international market were performed by Tajerin and Noor (2004) and Juarno
(2012). By using Market Share approach and econometrics methods, Indonesian
shrimp was found to be relatively competitive in the world market compared to
Thailand and other exporting countries. National shrimp was also still dominant in
13
Japan and the US market up to the year 2000. Yet, activities regarding cost
efficiency, including cost for marketing and quality enhancement, should
continuously to be done as strategy to improve the shrimp competitiveness
(Tajerin and Noor 2004).
Furthermore, Juarno (2012) who analyzed the factors which influenced the
Indonesian shrimp supply, demand and competitiveness in the world market using
2SLS model, Revealed Comparative Advantage (RCA) index and Constant
Market Share Analysis (CMSA) model, found that Indonesia has comparative
advantage by exporting shrimp to Japan, the US and the EU. However, the CMSA
result showed that the Indonesian export competitiveness was caused by product
and market specific effect, not commodity and market distribution effect which
means that Indonesia needs to be more diversified both in product and market.
Above all, a research comparing shrimp export competitiveness of
Indonesia and Thailand, both to the US with RCA index as the indicator and data
collected from the year 1989 until 2010 showed that the RCA values of Indonesia
were higher than one, reflecting export competitiveness of Indonesian shrimp in
the international market. However, Indonesia remained relatively disadvantaged
compared with Thailand. Thus, improvement in the infrastructure, i.e. shipment
network, packaging, and transportation is needed to strengthen Indonesian shrimp
export competitiveness (Wati et al. 2013).
Policy Analysis Matrix Studies on Shrimp in South East Asia
Since agricultural business activities and government policy cannot be
separated, Pearson et al. (2003) explained that PAM analysis is one approach to
observe the impact of the government policies on agricultural business, or in this
case, on shrimp farming. Studies on shrimp competitiveness in South East Asia
have been found frequently. However, research about competitiveness on shrimp
farming with respect to the government policies has not widely performed.
To determine the level of Vietnam shrimp competitiveness with regard to
the national policy impact, Kiet and Sumalde (2008) compared the intensive and
semi intensive shrimp farming in Mekong River Delta Area in 2005 by using
several methods (RCA or Revealed Comparative Advantage approach, PAM
approach, NSP or Net Social Profitability, NPP or Net Private Profitability, and
sensitivity analysis) to find the effect of changes in factors influencing the
competitiveness. Result of the study showed that Vietnam shrimp has comparative
(DRC=0.12) and competitive advantage (DRC*=0.08) in the world market. Thus,
the comparative advantage is strongly sensitive to the changes of feed price,
exchange rate, shrimp yield, and export price.
PAM study on shrimp which conducted in small scale shrimp farming in
West Nusa Tenggara, Indonesia indicated that the shrimp farming was profitable
and also had comparative and competitive advantages with PCR and DRC value
of 0.36 and 0.64, respectively. However, the shrimp business would be more
profitable if a proper investment were made by government (Zaini et al. 2003).
Competitiveness study of Malaysian brackishwater species performed by Ramzani
et al. (2013) reported that despite the small value of DRC for vannamei shrimp
(0.15), the social prices for production cost were higher than market prices which
14
showed that the shrimp producers acted as taxpayers for total input cost. The
PAM indicator also explained government policy had not protected the shrimp
industry in Malaysia.
Sriboonchitta et al. (2000) conducted a research to measure the shrimp
competitiveness degree in Thailand and other Asian countries (China, India,
Indonesia, Malaysia, Philippines, Taiwan, Thailand, Sri Lanka) using PAM
approach and RCA (Revealed Comparative Advantage). The result showed that
all countries had comparative advantages in producing shrimp. However, since
Thailand was observed to have the lowest cost of production among other
countries, shrimp farming in Thailand was considered to be fully supported by the
government policy.
3 FRAMEWORK
Theories related to this research, namely theory of competitiveness,
agricultural policy, policy analysis matrix, and social price are explained in this
chapter. Moreover, operational framework depicting the comprehensive guide
about this study is illustrated in the last subchapter.
Theory of Competitiveness
High possibility to obtain goods (and services) which cannot be produced
domestically has triggered countries involved in international trade. Moreover,
another reason which underlies countries in joining the trade is to gain profit by
purchasing products from other countries where it costs comparatively less to
produce them. Later, domestic resources related to the production of those high
cost products will be allocated in producing other products which have
competitiveness in the world market (Caballero et al. 2000).
Variation of policy analysis needs, opinions, and objectives for research
results in various concepts and measurements of competitiveness (Bojnec and
Ferto 2009 in Saptana 2010). Thus, the concept of competitiveness may be viewed
in several perspectives, i.e. business and economic. In terms of business
perspective, competitiveness is defined as a business concept used as basic of
many strategic analyses in order to improve firm performance (Lall 2001 in
Saptana 2010).
Regarding the economic perspective, competitiveness concept divided into
two level, namely macroeconomic level or national competitiveness and
microeconomic level or firm competitiveness. Indicators of competitiveness in
macroeconomic level are World Competitiveness Yearbook of IMD, Global
Competitiveness Report of the world Economic Forum, New Economy Report of
OECD, and Productivity and Competitiveness Indicator of the United Kingdom
Government. Furthermore, indicators for microeconomic level are Domestic
Resource Cost, Constant Market Share, Revealed Comparative Advantage, and
Trade Specialization Ratio.
15
The only meaningful concept of competitiveness at national level, as stated
by Porter (1990), is productivity which depends both on the product quality and
the production efficiency. Moreover, Porter created a concept which become
determinants of national competitive advantage, termed Porter Diamond and
consisted of four attributes, those are: 1). Factor conditions, that is the position of
nation in production factors, i.e. skilled labor or infrastructure, 2). Demand
conditions, mean the nature of domestic market for product and service produced
by industry, 3). Related and supporting industries, in respect of their presence or
absence, and 4). Firm strategy, structure, and rivalry, which focus on the condition
regulating how national companies are created, organized, and managed,
including the nature of domestic rivalry. Furthermore, the World Competitiveness
Book published by Institute for Management Development (IMD) defined four
groups of variable indicating national competitiveness, namely economic
performance, government efficiency, business efficiency, and infrastructure
(Arslan and Tathdil 2012).
At firm level, competitiveness is reflected in the ability of a firm to
produce in lower cost and higher quality. Thus, important factors determining firm
competitiveness are quality, cost, and the price level (Düzgün 2007 in Arslan and
Tathdil 2012). Later, Buckley et al. (1988) stated that as countries cannot have
international competitiveness for all commodities, having comparative advantages
in selected products is the only way to gain competitiveness. Therefore, improving
performance of firms is necessary since competitiveness is reflected in the
improvement of profit performance in the long-run. Similar to Buckley, Lall
(2001) in Saptana (2010) defined firm competitiveness as the ability of firm to do
better in sa