Effect of marketing efficiency improvement in Indonesia

This paper studies the effect of marketing efficiency in Indonesia. If the government could improve the marketing efficiency may result to an improvement on food security and household welfare. This analysis used a computable general equilibrium model where households disaggregated by eight income class based on Indonesian SAM year 2008 with 23 sectors. The results showed that the improvement of marketing efficiency by 5-15% could increase the supply of domestic agricultural by 9.7 to 200%, except nuts which remained constant, while the other sectors would be vary. Exporting from agricultural sectors increased by 120-1287%, but the rice and other crops would declined, the other sectors rose and constant. The imports quantities of agricultural sector generally rose, except the corn are remained constant, tubers are decline. Meanwhile the quantity import of other sectors would rose. Improvement of agricultural marketing efficiency also resulted in a decrease in household's expenses by 3.3 to 6.7%, 41-45% and government by 3.9 to 7.3%. As a contra, the welfare of households rose from 0.7 to 1.1% and the producer dropped 38-40%. Thus improving marketing efficiency of agricultural products have a positive effect on increasing food security and household welfare in Indonesia.