Factors Affecting the Demand for and Supply of Beef in East Kalimantan

Hui-Shung Christie Chang, Sionita Gloriana and Nyak Ilham

Australasian Agribusiness Review, 2020, vol. 28, issue 3

Abstract: Demand for beef has been increasing in recent decades in metropolitan areas across Indonesia, including Balikpapan and Samarinda in East Kalimantan, as a result of population and income growth, and urbanisation. However, local supply has been unable to meet the growing demand, with beef prices rising continuously. The gap has been filled by the interisland live cattle trade, as well as frozen beef imported from overseas. Lack of local supply and rising beef prices are a common issue across Indonesia in spite of a range of policy measures aimed at increasing local production and stabilising prices. The objectives of this study were to identify the factors that affect the demand for, and supply of, beef in East Kalimantan, and to draw policy implications. This paper was based on desktop research, informant interviews of key market chain players, and consultations with government officials. Field research was conducted in two major cattle producing districts in East Kalimantan (Penajam Paser Utara and Paser) and in two major cities (Samarinda and Balikpapan) where most beef was consumed. Factors affecting the demand and supply of beef were identified, including demand seasonality, supply shortages and disruptions in interisland trade, imperfect market structure, changing consumer beef purchasing behaviour, increasing beef imports, and government interventions in the market chain. All of these factors have contributed to a highly unstable beef market. The highly seasonal demand, unpredictable supply, and long and complex market chain mean it is difficult, if not impossible, to effectively balance demand and supply or stabilise prices through government interventions. Rather, our analysis shows that beef market chain players are entrepreneurial, innovative and capable of responding to changing market conditions if they can be supported by a stable business environment and evidence-based development and trade policies.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:auagre:335253

DOI: 10.22004/ag.econ.335253

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