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Indonesian fish consumption: an analysis of dynamic panel regression
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4th International Conference on Tropical and Coastal Region Eco Development
IOP Conf. Series: Earth and Environmental Science 246 (2019) 012005
IOP Publishing
doi:10.1088/1755-1315/246/1/012005
1
Indonesian fish consumption: an analysis of dynamic panel
regression model
Firmans yah1, Shanty Oktavilia1,2*, Ryan Prayogi 1, Rus li Abdulah3
1Department of Economics, Diponegoro University, Jl. P rof Sudharto SH, Tembalang,
Semarang, Central Java P rovince, Indonesia
2Fac ulty of Economics, Se marang State University Jl. Se karan, Gunung Pati, Semarang,
Central Java Province, Indonesia
3Institute for Development of Economics and Finance , Jl. Batu Merah No.45, Pejaten
Timur, Jakarta, Indonesia
Corresponding author: oktavilia @ ma il. un nes.a c . id
Abstract. The level of Indonesian fish consumption is relatively lower than other countries in
Southeast Asian countries and Asia as a whole, while Indonesia is a large fish producing country
which is one of the archipelagic countries with the longest coastline in the world. The research
employs the panel co-integration analysis and panel-based Error Correction Models (ECM) to
examine the short and long-term relationship of 31-province incomes and fish prices toward fishery
consumption in Indonesia along 2010 –2015. The res earch fin ds t ha t fish price and income
statistically s ignificant affect fish consumption in short and long -term, except the income in the short-
term model. Price and income elas ticity for fish cons umption is inelastic in the short and the long-
term in Indonesia.
1. Introduction
Indonesia has a highest fisheries production in Southeast Asian. In 2011, the produc tion of Indonesian fish
was rec orded a t 13.6 million tons; w hich is supe r ior compare d to othe r Southe a st Asia n countries such as
Vietnam (5.15 million tons ), Myanma r (2. 98 million tons ), the P hillipine s (2. 93 million tons ), Tha iland ( 2. 6
million tons ) a nd Ma la ysia 1.6 million tons. H ow e ver, the high of th e leve ls of fish pr oduction does not
indicate the levels of consumption. Based on 2011 data, it shows that the Indonesia’s fish consumption is
32.25 kg/capita/year, and 2017 fish consumption is 47.34 kg / capita. Compared to other countries in 2011,
the fish consumption of Indonesia is lower than Malaysia (58.1 kg/ca pita/year), Myanmar (55
kg/c a pita /ye a r), Viet na m ( 33.2 kg/capita/year) and the Phillipine s (32. 7 kg/ca pita / ye a r ) [1] [2].
Now, an intensive progra m called ‘Gemarikan’ is implemented. The ‘Gemarikan’ is a government
progra m to incre ase the community fish consumption. The program aims to improve the protein
consumption de rived from fish which relevant with the government's policies to improve the quality of life
of Indone sian pe ople, outright increasing the e conomic of marine a nd fisheries. Based on Ministry of Marine
Affairs and Fishe ries Republic of Indonesia data, the re are 9.9 million tons of po tentia l f is h r e sourc e s a nd
83.6 million hec t a res of cultivation potenc y t ha t a re expe c ted to improve e mployme nt , a nd incr e a se the
ava ila bilit y and c onsumption of fish prote in f or the c ommunity. T he incre a s e of fis herie s industr y a c tivity
by inves tme nt incr e a se will attrac t production inputs such as fuel-produc ing, trade of boats and fishe ry
4th International Conference on Tropical and Coastal Region Eco Development
IOP Conf. Series: Earth and Environmental Science 246 (2019) 012005
IOP Publishing
doi:10.1088/1755-1315/246/1/012005
2
equipment, and also promote the other industries which use fishery output as its inputs, suc h as t he fish
preservation industry [3].
In economics, the main dete rminant of the consumption of goods is the price of goods, which have a
negative re lationship betwee n the two. A rise in the price leads to a decrea se in the quantity consumed, and
vice versa. The other dete rminant was the consumer income, which has the positive relationship to the
quantity consumed. An increase in income lead to a rise in quantity consumed, vice versa [4]. The
percentage cha nge of quantity consumed is affe cted by the percentage change of the independe nt variables
is called the elasticity. The elasticity of the price of fish is the ratio of the percentage change in fish quantity
consumed to the percentage change in price of fish. Whereas the income elasticity of consumption is the
ratio of percenta ge c hange s in quantity of fish consumed for the percentage cha nges in income.
Indonesian people’s c onsumptions of fish are dominated by the consumption of fresh fish. According to
Virgantari [5], the elasticity value of the fresh fish is inelastic in price or income. Dey [6] finds that the
demand of fish in Asia showing that the elasticity of estimated price a nd income of all fish types a re more
elastic in group of the poorer households. Omezzine [7] examines the elasticity of the demand of fre sh fish
in Oman, an Arabian Gulf country, and finds that the income and price elasticity of the fre sh fish are small
but pos itive , w hic h indicat ing that t he de mand of fis h will c ontinue t o increas e w ith the gr owing of
incomes, a driving force for market development a nd marketing efficienc y. It is sta ted that in the long run,
the fish consumption pe r c a pit a will be sta ble but its compos ition w ould s hift towards high va lue -adde d
products, which then are a profitable market segment for the Oman fish business. Ze raatkish, et al. [8] finds
that the importe d fishery products a re elastic to import prices. Can [9] indicates that the elasticity of fish
price and de mand is low, which are caused by the existing traditional eating habits. According to the
discussion above, this study aims to analyze the effect of fish price s and per capita income on fish
consumption in Indonesia in the long and short term.
2. Research Methods
This research e mploys panel co-integration and panel-based Error Correction Models (ECM) to examines
the short and long-term relationship of 31-province income and fish price toward fishery consumption in
Indonesia along 2010–2015 [12] [13] [14]. The econometric model for the relationship of the variables as
follow s:
_ =
+
+
+
(1)
where the β0 is constant; β1, β2 are the regression coefficients and ε is the error terms, the subscript t and i
denote the time series and the c ross se ction indicator. LnFISH_ CONSUMPTION is the growth of fish
consumption (in percent), LnFISHPRICE is the growth of fish price (in percent) and LnINCOME is the
growth of income(in percent).
This study a pplied Engle-Granger (EG) procedure of Error Correction Model (ECM) to analyses the
dynamics of the short-run e ffect of economic growth on fish consumption, where the long-run re lationships
can be performed by estimating the regression of all co-integrated equations [9]. The c o-integration of the
tw o (or mor e ) time se r ies va riable s indicate s there is a long -run nexus or e quilibrium be tween the variables,
then the shor t-r un dis e quilibr ium rela t ionship betw e e n depe nde nt and independent va riable s can be
estimated.
EG test is conducted to test the cointegration of the residual , using the Dicky-Fuller (DF) stationary
test [10] [11]:
ut = Ω1 + vt (2)
Following the stationarity and cointegration test, the short-term equation is run with the regre ssion model
as follow s:
∆_ =
+
∆ +
∆ +
+
(3)
4th International Conference on Tropical and Coastal Region Eco Development
IOP Conf. Series: Earth and Environmental Science 246 (2019) 012005
IOP Publishing
doi:10.1088/1755-1315/246/1/012005
3
In the equation of the short-term model as an Error Correction Term.
3. Re sult and Discussion
The consumption of fish data collected from Statistics Indone sia [ 3], and include c onsumption of household
(fresh/wet fish and shrimp, preserved fish and shrimp, processed food and spices), consumption outside the
household (consumption in restaurants, restaurants, hotels, prisons, houses sickness, and school), and
consumption of processed fish such a s fish meatballs, nuggets, ‘somay’, ‘pempek’, fish c rackers, and others.
From data on consumer prefere nce s for fishery products consumed in 2017, fresh fish is the most
desirable part (76 percent). The other largest portion of consumption is fish and processed food (19 percent)
and salted fish by 15 percent. Based on the Indonesian Ministry of Ma ritime Affairs and Fisheries, the types
of fish most consumed by Indonesians per year (2010-2017) are Catalans a nd Tuna Fish (16.45 percent) and
processed fish and fish such as meatballs, sausages, nuggets a nd others (9.02 percent). Then followed by
groups of catfish, catfish, and cork (7.92 percent), mackerel (6.65 perc ent), Milkfish (5. 43 percent), Tilapia
(5.26 perc ent), Shrimp and Calamari (3.87 percent), Anchovy (3.36 percent), sa lted fish group (2 percent),
and salted mackerel (1.36 percent) [2].
This study applies a dynamic model of Error Correction Model (ECM) with Fix Effect Model (FEM).
The dynamic model of ECM is use d to balanc e e conomic relations. The results of the long-term empirical
model are as follows:
LnFISHCONSUMPTION= 0.342124807326 - 0.1018*LnFISHPRICE + 0.1320*LnINCONME (4)
The results of the short-term model equation, after cointegration tests are as follows:
LnFISHCONSUMPTION= 0.0631 - 0.0622*LnFISHPRICE + 0.1604*LnINCONME – 0.1044ECT (5)
Table 1. Estimation result
Short -term
Long-term
Coefficient
t-statistic
Coefficient
t-statistic
C
0.063152
4.691741
0.342125
2.243466
LNFISHPRICE
-0.062281
-2.012997*
-0.101869
-2.393408*
LNINCOME
0.160499
0.481411
0.132066
11.66901*
RES1(-1)
-0.104477
-6.134992
Notes: *) significant at 5%
Table 1 displays the short and long-term estimation results. It shows the same direction of independe nt
variables to de pende nt. The price of fish ha s a negative effect and people's income has a positive effect
towa rds fish consumption. All indepe ndent variables in all models are statistically significant affect the fish
consumption, except the income at the 5 percent significance level in the short-term. The short-term fish
pr ic e coef f icient indicate s tha t a fish pr ic e incre a s e of 1 pe rcent the n f ish cons umption w ill de c rease by
0.062 percent in the short-term.
T he long-t e rm c oe f ficient indic a t es that 1 pe rcent inc rease by fish pr ic e s will de c rease f ish consumption
by 0.102 percent. The effect of income on fish consumption is significantly positive at 5 percent level of
significant. The coefficient value is 0.132 indicates that the increase of income by 1 percent leads to increase
the fish consumption by 0.132 percent.
Overall results of the study indicate the consistency in the relationship betwee n the ef fect of income and
fish prices for fish consumption in Indonesia. The negatively effect of fish price towa rd fish consumption,
and the percentage effect of fish prices is very small or inelastic. The changes of price of fish leads small
changes in fish consumption. In fa ct, the society de pende nce on animal protein source and plant-based food
4th International Conference on Tropical and Coastal Region Eco Development
IOP Conf. Series: Earth and Environmental Science 246 (2019) 012005
IOP Publishing
doi:10.1088/1755-1315/246/1/012005
4
sources is also large. The income variable, in both models shows consistency in the direction of the
relationship, but only in the long-term model that shows a positive and significant relationship.
4. Conclussion
Price and income elasticity of the consumption of fish in Indonesia is inelastic for the short and long-term.
Fish price and income are statistically significant affect the fish consumption in sort and long-term, except
the income in the short-term, in a ll province a long 2010-2015. Fish price stabilit y import a nt to be ma inta ined
by the government. In addition, it suggest that for the future researc h on fish production and consumption
betwee n regions.
Government policies, which are direc ted to improve the f ish consumption, inc lude: (1) P rovision of
quality fishery products through guidance and certification of Fish Processing Units; (2) Implementation of
‘Gema rika n’ massively, es pecially in provinces w here fis h cons umpt ion is still low; (3) C oope rating w ith
local governments, fostering culinary centers and hygienic fish marke ts; (4) Deve lopment of the modern
fish market in big cities to bring fish products closer to consumers; (5) Maintaining the availability of fis h
products tha t have quality and hygienic standards.
Refe rence
[1] Kata Data Publication Team Graph Info 2016 Abundant Fish, Consumption is encouraged
[2] Ministry of Marine Affairs and Fishe ries Republic of Indonesia 2018 Work report 2017 (Jakarta:
Ministry of Ma rine Affairs and Fisheries Republic of Indonesia) [in Indonesia]
[3] Firmansyah 2018 Impact of fishery policy on fishery manufacture output, economy and welfare in
Indonesia IOP Conference Series: Earth and Environmental Science 116(1) 012-016
[4] Mankiw, Gregory 2012 Macroeconomics 8th edition (New York: NY Worth)
[5] Virgantari, Daryanto, Harianto and Kuntjoro 2011 Analysis of fish demand in Indonesia: quadratic
almost ideal demand system (QUAIDS) model approach Marine and Fisheries Socio-Economic
Journal 6 (2) 191-203 [in Indonesia]
[6] Dey MM, Yolanda T, Kumar P, Piumsombun S, Haque Muhammad S, Li L, Radam A, Senaratne
A, Khiem TN and Koeshendra jana S 2008 Demand for fish in Asia: a cross-country analysis The
Australian Journal of Agricultural and Resource Economics 321–338
[7] Omezzine, Bougha ni H, Al-Oufi 2003 Demand elasticities of f resh fish commodities: a case study
Agricultural and Marine Sciences 8(2) 55-61
[8] Zeraatkish, Rashidi, Rashidi 2016 Estimate of Armington substitution elasticity for fishery products
in Iran Iranian Journal of Fisheries Sciences 17(3) 603-612
[9] Can, Gunlu and Can H 2015 Fish consumption preferences and factors influencing it Food Sci.
Technol Campinas 35(2) 339-346
[10] Thomas, R. L 1997 Modern econometrics (Harlow, United Kingdom: Addison Wesley Logman)
[11] Gujarati D N and Porter D C 2009 Basic Econometrics 5t h e d (N e w Yor k: McGraw-H ill)
[12] BPS 2017 prices received by farmers indices (it), prices paid by farmers indices (ib), and farmers’
terms of trade of fishery subsector (NTN) by province (2007=100), 2008-2016 (Jakarta: BPS)
[13] BPS 2018 Per capita gross regional domestic product at 2010 constant market prices by province,
2010-2017 (Jakarta: BPS)
[14] BPS 2018 Per Ca pita Gross Re gional Domestic Product at 2010 Constant Market Prices by Province
2010-2017 (Jakarta: BPS)