Do indonesian dairy farmers need special regulation?

Abstract

Facts and discourses that happen in the dairy farms development in Indonesia exhibit government regulations as a determining factor. In the local and global economic context, government policies are getting important to support upstream side dairy farmers production. The study analyzed the impact of various government regulation on Indonesia’s total imports of milk. The study also analyzed the effects of two crisis periods, namely the Asian economic crisis in mid-1997 and the 2008 global crisis. It triggers import turmoil and government regulation changes. Then, the study considered Indonesia's policy related to WTO to see the broader impact on milk imports. Using regression analysis on series data during 1977-2016, our research found significant robust that the two crisis period suppressed milk import. Milk imports had a vulnerability to external shocks risk through exchange rate fluctuations. The Indonesian global trade policy through the WTO mechanism, however, had an insignificant impact on milk imports. The Government regulation related to WTO tends to weaken the position of dairy farmers on the milk market competition. Meanwhile, various government regulation increased milk import. Therefore, the Indonesian government should make special regulations that support dairy farmers to increase milk production.