Indonesian Coffee Export Competitiveness in the

Western European Market, 2008 - 2018

Devica Intan Setyorini Erica Indryani Tita Kartika

 Chapter I

Introduction
 Research Background (1)
Plantation
GDP of primer commodities in 2014 - GDP & crop
2018 based on constant prices (billion
rupiah)
Tahun
GDP
2014 2015 2016 2017 2018
Agriculture, Animal Husbandry, Hunting and
Agricultural Services
Plantation crops
880389.5
338502.2
906805.5
345164.9
936356.9
357137.7
969773.9 1005441
373054 387501.5
Share agriculture to
GROSS DOMESTIC PRODUCT 8564867 8982517 9434613 9912704 10425316 GDP > 9% & share
Share agricultural to GDP 10.27908 10.09523 9.924698 9.783142 9.644223
Share plantation to agriculture 38.44914 38.06383 38.14119 38.46814 38.54046 plantation to agriculture
> 30%
Source: BPS

One of the main commodities:

Coffee
 Research Background (2)
The Largest Coffee Exporter Country in the World in 2014
Number Nation Volume
One of the main Indonesia 1 Brazil 2.185.200.000
commodities: Coffee became one of the 2 Vietnam 1.517.880.000
biggest coffee exporters 3 Coloumbia 657.240.000
in the world (2014) 4 Indonesia 358.620.000
5 India 307.860.000

Source : (International Coffee Organization, 2016)

Source of foreign Source of foreign

2014 – 2018 : Coffee was
exchange : ranked
exchange and fourth largest after
one of the
trading activities commodities main
the commodities of
export in Indonesia
(export and import) palm oil, rubber and (Source : Kemendag 2014 – 2018)
cocoa.
 Research Background (3)
2014 – 2018 : Coffee was
one of the Austria, Belgium, France,
commodities main Liechtenstein, Germany,
export in Indonesia Germany has a neighbor
(Source : Kemendag 2014 – 2018) in Western Europe Luxemburg, Monaco,
Netherlands, Switzerland

Country of destination?
Europe? So Germany become Big
Why? market for coffee And then, Indonesia has
a market in Western
Europe

does not produce green

Germany become
coffee beans, so they depend
biggest importer coffee in
on imports from coffee
the world after USA and
producing countries, such as
Japan
Indonesia
 Research Background (4)
And then, Indonesia has
The Value of Indonesian Coffee Exports to
a market in Western Western Europe 2018
Europe
The Value of Indonesian Coffee Exports to Western Europe
5000000
4500000
4000000
3500000

000 US $
3000000
2500000
Indonesia become the fourth biggest 2000000
coffee exports to Western Europe 1500000
1000000
500000
0
Br a zil Vie tn am Co lo m b ia In d o n e sia India Mexico

Research Period?
Research Background (5)
Research Period :
2008 - 2018

Export Value fluctuate

Export volume
decrease
Research Background (5)
Export volume
decrease

Unstable

Low Potential to
become #1 exporter
coffee
Research Background (6)
Export Value of Coffee in Indonesia to Western Europe
14000000

12000000

Value Export (1000 US$)

10000000

8000000

6000000

4000000

2000000

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Years

Source : UN comtrade
Research Background (7)
Export Volume of Coffee in Indonesia to Western Europe
160000000

140000000

120000000

Export Volume (kg)

100000000

80000000

60000000

40000000

20000000

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Years

Source : UN comtrade
Research Question
1. How the competitiveness of Indonesian coffee
export in Western Europe?

2. What are the factors that affect Indonesia’s

coffee export performance
to the main market of Western Europe ?
 Chapter II

Literature
 Literature
International Competitiveness
Trade The ability of a commodity to
enter a foreign market and
Trade that carried out by the ability to survive in the
residents of a country market, it means this
with residents of other product has competitiveness
countries on the basis and preferred by consumers
with mutual agreement (Tambunan, 2001).

Export
According to the
Punan (1992: 2)
"Export is removing
goods from Indonesia,
leaving Indonesian
customs areas by
fulfilling the provisions
applicable.
 Theory of comparative
Literature
advantage

Theory by David Ricardo. In this Export Product

theory, Ricardo have states that
international trade occurs when there
Dynamics (EPD)
are differences in comparative
advantage between countries. The Export Product Dynamics
Comparative advantage will be (EPD) used to identify the
achieved if a country is able to
produce more goods and services at
competitive advantage or
a lower cost than other countries. competitiveness of a
commodity and also to
Revealed Comparative determine a commodity with
Advantage (RCA) dynamic performance or not.
RCA is one of the methods
that used to show a
comparison between the
share of a country's
commodity exports against
the share of exports of these
commodities in the world
Empirical Studies
Judul
Daya Saing dan Determinan Ekspor Biji Kopi
Indonesia ke Jepang
Analisis Determinan Daya Saing Kopi Indonesia di
7 Negara Importir Terbesar Dunia (2000 – 2017)
Penulis Tahun Hasil
Asniar 2017 Variabel harga kopi dunia, GDP
perkapita, Konsumsi sebelumnya,
Populasi Jepang merupakan
variabel yang berpengaruh
signifikan terhadap ekspor biji kopi
Indonesia ke Jepang.
Putri Sekarsinung 2019 Hasil analisis data panel diperoleh
bahwa volume ekspor dan harga
dunia berpengaruh positif dan
signifikan, kurs riil berpengaruh
negatif dan signifikan, sedangkan
variabel kebijakan dalam negeri
tidak berpengaruh signifikan
terhadap daya saing ekspor kopi
Indonesia
 Export Volume of Export Value of Coffee
Coffee is decrease is fuluctuative during
during 2008-2018 2008-2018

Competitiveness of Export
Coffee Indonesia in
Western Europe

RCA EPD

Global Western Europe’s Western Europe’s

Coffee Price GDP Nominal exchange rate

Suitable Strategy
 Chapter
III

Methodology
Data
Source Data
Volume export coffe
Source
UN comtrade
Global coffee price indexmundi
Value export coffee UN comtrade
GDP Western Europe WDI
Nominal Exchange rate of Western WDI
Europe
GDP of primer commodities in BPS
2014 - 2018 based on constant
prices (billion rupiah)
 Methodology

01 02

RCA EPD

03
PANEL
  RCA =

RCA Where :
• Xij : Indonesian export value commodity i to West Europe
(j)
• Xj : Indonesian total export value commodity i to West
Europe (j)
• Xiw : The world export value commodity i to West Europe
(j)
• Xw : The world total export value commodity I to West
Europe (j)
• i = Coffee
• RCA > 1  have competitiveness
EPD
X-axis: Share of commodity j in i’s country :

Y axis: share of commodity j in world export:

EPD Share of Country’s Export in Share of Product in World Trade (y)
World Trade (x)
Rising (Dynamic) Falling (Stagnant)

Rising (Competitive) Rising Star Falling Star

Falling (Non-Competitive) Lost Opportunity Retreat

PANEL Choosing Model
 Chapter
IV

Result & Discussion

 RCA
Year RCA  

2008 15.77199
• Indonesian coffee export has a 2009 9.417054
comparative advantage above 2010 12.26978
average (world) or has a strong
2011 4.519545
competitive
2012 5.413884
• From 2013-2018, the competitiveness
RCA >1
2013 10.71313
value is decreasing
2014 5.421634

2015 4.559435

2016 4.59499

2017 5.582151

2018 3.248826
EPD (1)
Year X Y EPD

2008 0.019568 0.000595 Rising Star

2009 -0.00899 0.000577 Lost Opportunity

2010 -0.00689 -0.00122 Retreat

2011 -0.0083 0.000947 Lost Opportunity

2012 0.005798 0.000646 Rising Star

2013 0.00608 -0.00102 Falling Star

2014 -0.01008 0.00028 Lost Opportunity

2015 0.003325 0.001197 Rising Star

2016 1.35E-05 -2.5E-05 Falling Star

2017 -0.00091 -0.00081 Retreat

2018 -0.00571 0.000279 Lost Opportunity

 EPD (2)
X = Share of EPD
Indonesian 0
Coffee Export 2015

to Western 2011 0

Europe in 2009
2012 2008
0
World Trade 2014 2018 Rata-rata
2016
0

Y
-0.02 -0.01 -0.01 0 0.01 0.01 0.02 0.02 0.03

Y = Share of 0

Indonesian 2017
2013
Product Export 2010
0

to Western 0
Europe in X
World Trade

There is a lost opportunity because of the decline in

market share in dynamic products, where the world coffee
supply is still greater than in Indonesia
 Panel (1) : Stationarity
 Ho : = 0
H1 : < 0

Variable Prob Stasionar

C_PRICE 0.0022 Level

GDP 0 Second difference
KURS 0.0005 Second difference
RCA 0.0178 First difference
Panel (2) : Choosing Model
Chow Test

Hausman Test

FEM choosed
 Panel (3) : FEM
  RCA = + 58,127 – 37,81Kurs – 9,37E-06GDP – 2,108C_Price
 Chapter
V

Conclusion & Suggestion

 Conclussion

From 2008 – 2018 Indonesian coffee has

strong competitiveness, because RCA >1
But have weak in competition in the export
market from 2013 – 2018, because RCA
decreasing

The EPD method shows that Indonesian

coffee in the Western European market is
lost opportunity because there is a decrease
share market in dynamic product, where
world coffee supply is bigger than Indonesia

Global coffee price, GDP of Western Europe

and nomnal exchange rate of Western
Europe are significant and have negative
effect for competitiveness Indonesian coffee
 Suggestion
Farmer
1. Increase the quantity and quality
according to consumer desires.
2. improve diversification so that it can
improve the volume and value of coffee
exports.

Government
1. Government should increase the Indonesian
coffee competitiveness by manage cost
logistic efficiency
2. conduct training and guidance to farmers and
also to the coffee processing industry, facilities
providers, as well improve research related to
processing techniques and processes coffee.

Researcher
Next research could find the determinant of
demand exporter and extended strategy of
coffee downstream
THANK YOU