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Impacts of trade policy on the welfare of citrus producers and consumers in Indonesia

Rizka Amalia Nugrahapsari (National Research and Innovation Agency Republic of Indonesia, Jakarta, Indonesia)
Abdul Muis Hasibuan (Research Center for Behavioral and Circular Economics, National Research and Innovation Agency Republic of Indonesia, Jakarta, Indonesia)
Tanti Novianti (Faculty of Economics and Management, Bogor Agricultural University, Bogor, Indonesia)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 5 February 2024

Issue publication date: 10 September 2024

172

Abstract

Purpose

This study aims to investigate the factors influencing the citrus trade in Indonesia, the effects of tariff and non-tariff policies on the industry and the welfare of producers and consumers.

Design/methodology/approach

The research used annual series data from 1991 to 2021 and employed inferential, simulation, and descriptive analyses. The two-stage least squares (2SLS) of 19 simultaneous equations were used to estimate parameters.

Findings

The results indicate that free trade policies and restrictions have influenced the citrus industry, leading to a reduction in Indonesian citrus imports, and increased consumer and producer prices. However, eliminating import tariff policies on citrus from China and import restrictions increased producer surplus while decreasing consumer surplus, government revenue, and total welfare. Therefore, trade policies should be combined with non-trade policies such as citrus region development policies and advancing cultivation technology.

Originality/value

This study provides empirical evidence for the Indonesian government to formulate effective citrus trade and development policies. It emphasizes the importance of carefully considering the impact of trade policy on the citrus industry and the need to implement non-trade policies such as citrus zone development policies and advancing cultivation technology to benefit both producers and consumers.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0148

Keywords

Acknowledgements

The authors express gratitude to Professor Bonar M Sinaga for valuable discussions. This study was made possible with support from the Indonesian Center for Horticultural Research and Development, IAARD and National Research and Innovation Agency (BRIN).

Citation

Nugrahapsari, R.A., Hasibuan, A.M. and Novianti, T. (2024), "Impacts of trade policy on the welfare of citrus producers and consumers in Indonesia", International Journal of Social Economics, Vol. 51 No. 10, pp. 1278-1297. https://doi.org/10.1108/IJSE-02-2023-0148

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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