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Performane and Competitiveness of Indonesian Nutmeg in Export Market

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Performane and Competitiveness of Indonesian Nutmeg in Export Market E3S Web of Conferences 232, 02018 (2021) https://doi.org/10.1051/e3sconf/202123202018 IConARD 2020 Performane and Competitiveness of Indonesian Nutmeg in Export Market Helena Juliani Purba1,*, Eddy Supriadi Yusufi1, and Juni Hestina1 1 Indonesian Centre for Agricultural Socioeconomics and Policy Studies, Jl Tentera Pelajar No 3B, Bogor, West Java, Indonesia Abstract. Export is one source of foreign exchange earnings for the country. This study analyzes the competitiveness of Indonesian nutmeg in the world market. Measurement of competitiveness was conducted by looking at the comparative and competitive advantages nutmeg products in each of the main markets for export and comparison with competitors. The analytical method uses Revealed Comparative Advance (RCA) and Export Product Dynamic (EPD) in the period 2014-2018. The competitiveness analysis results show that nutmeg and nutmeg powder products have competitiveness in all export destination markets. Competitor countries, namely India, do not have competitiveness in the Dutch and Japanese markets. The nutmeg commodity has a competitive advantage with the trend and the share of exports that are still growing (fast-growing). However, nutmeg powder is no longer competitive in the export destination market. Active efforts to find new markets through market diversification while maintaining existing markets can be an option to increase Indonesian nutmeg exports. 1 Introduction Indonesia is one of the most reckoned nutmegs producing and exporting countries in the international world. Nutmeg (Myristica fragran haitt) is a spice plant that has a high economic value, especially the parts of nutmeg and flowers (mace), which can be used as nutmeg oil (oleum myristicae, oleum myrist or myristica oil). Nutmeg oil is one of the essential oils that are in high demand in the international market. Indonesian nutmeg has an advantage in the world market because it has a distinctive aroma and high oil yield. Almost all of the cultivation of nutmeg in Indonesia is managed by smallholder plantations. Most of them have not applied proper cultivation technology, low yield quality because harvesting and processing are still traditional. The development of the area of nutmeg in Indonesia during the period 2010-2019 (2018 provisional figures and 2019 estimated figures) tends to increase from year to year, namely from 118.34 thousand ha in 2010 to 202.78 thousand ha in 2019 with an average increase of 7.47% per year [1]. When viewed from its production, Indonesia's nutmeg production has tended to increase during the last ten years, from 15.79 thousand tons in 2010 to 37.49 thousand ha in 2019, with a growth of 9.47% / year. * Corresponding Author: [email protected] © The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/). E3S Web of Conferences 232, 02018 (2021) https://doi.org/10.1051/e3sconf/202123202018 IConARD 2020 Nutmeg trade in Indonesia is more oriented towards the export market than for domestic consumption. In the domestic market, to obtain added value from primary to processed form, nutmeg is generally made as sweets and syrup. The marketing opportunity for sweets is still huge because marketing is only around production centers. In 2015-2018, nutmeg consumption was included in other kitchen spices, namely nutmeg, ginger, turmeric, and so on. Consumption of other kitchen spices in 2015-2018 fluctuated, namely 0.55 kg/capita in 2015, 0.59 kg/capita in 2016, 0.53 kg/capita in 2017, and 0.63 kg/capita in 2018 [2]. The development of export volume during the period 2009-2018 was quite fluctuating but tended to increase. The average increase in export volume during that period was 3.07% per year. Meanwhile, the import volume of nutmeg in the 2009-2018 period was lower than the export volume, with an average growth of 67.35% per year [2]. The main destination markets for Indonesian nutmeg exports in 2017 were Vietnam, India, Germany, the USA, and the Netherlands [3]. According to [4], nutmeg is one of the plantation crops that so far has generated quite a large foreign exchange. In 2017, this commodity's foreign exchange value reached USD135.9 or equivalent to IDR 1.3 trillion from the production of 31.84 thousand tons and an area of 196.86 hectares and involved 235,518 households. In the international market, Indonesian nutmeg is famous for its good quality branding for Banda and Siau nutmeg. Based on the status of the concession, nutmeg plantations are divided into three, namely Smallholder Plantation (PR), State Large Plantation (PBN), and Private Large Plantation (PBS). Of the three types of exploitation, PBS has not cultivated nutmeg since 2004, while the total area of PBN since 2014 has not changed, which is 485 ha. During the period 1980- 2019, most of the Indonesian nutmeg (98.68%) was produced by PR, and PBN owned the remaining 1.32%. Therefore, the increase or decrease in the area of national nutmeg is largely determined by the increase or decrease in PR nutmeg. Nutmeg production ise still traditionally managed by people with insufficient knowledge of cultivation technology. During the last ten years, from 2010-2019, Indonesian nutmeg production tended to increase by 9.47% per year if viewed from its production. In 2019 (estimated figures), nutmeg production reached 37.49 thousand tons. Apart from production, the productivity of nutmeg also experienced an increase in growth during the same period and tended to increase by an average of 3.52%/year or 459 kg/ha. Until now, nutmeg, as one of the superior commodities of Indonesian spices, has not been able to optimize its exports so that various efforts are still needed to improve its export performance. Many factors influence this condition, one of which is an indicator of Indonesian nutmeg's competitiveness in the international market and various other factors. During the 2014-2019 period, Indonesia, as the leading exporter of nutmeg, was followed by India and Grenada [5]. Indonesia's export volume increased throughout the year until 2019, Indonesia's export share reached 64% with a volume of 16.5 thousand tons as shown in Figure 1. To develop nutmeg exports in the world market, it is necessary first to know how competitive the nutmeg products are in the export destination market. If the product's competitiveness is high (it has comparative and competitive advantages), then a strategy to increase exports can be determined and implemented. It is crucial to fulfill the quality requirements of nutmeg, both to meet the demand for quality seeds and ground nutmeg in world trade and to increase the selling price received by farmers. 2 E3S Web of Conferences 232, 02018 (2021) https://doi.org/10.1051/e3sconf/202123202018 IConARD 2020 Nutmeg trade in Indonesia is more oriented towards the export market than for domestic 30.000 consumption. In the domestic market, to obtain added value from primary to processed form, 25.000 20.000 15.000 nutmeg is generally made as sweets and syrup. The marketing opportunity for sweets is still 10.000 5.000 huge because marketing is only around production centers. In 2015-2018, nutmeg - consumption was included in other kitchen spices, namely nutmeg, ginger, turmeric, and so 2014 2015 2016 2017 2018 2019 on. Consumption of other kitchen spices in 2015-2018 fluctuated, namely 0.55 kg/capita in Indonesia 11.468 13.987 12.577 16.208 16.649 16.558 2015, 0.59 kg/capita in 2016, 0.53 kg/capita in 2017, and 0.63 kg/capita in 2018 [2]. India 3.793 4.100 5.175 4.905 3.733 2.490 The development of export volume during the period 2009-2018 was quite fluctuating Grenada 578 689 883 960 1.024 642 but tended to increase. The average increase in export volume during that period was 3.07% World per year. Meanwhile, the import volume of nutmeg in the 2009-2018 period was lower than 16.729 18.850 18.656 21.334 20.378 25.767 the export volume, with an average growth of 67.35% per year [2]. The main destination Indonesia India Grenada World markets for Indonesian nutmeg exports in 2017 were Vietnam, India, Germany, the USA, and the Netherlands [3]. According to [4], nutmeg is one of the plantation crops that so far has generated quite a large foreign exchange. In 2017, this commodity's foreign exchange Fig. 1. Export volume from nutmeg’s exportir in the world market, 2014-2019 value reached USD135.9 or equivalent to IDR 1.3 trillion from the production of 31.84 One of the growing export market destinations for Indonesian nutmeg is the European thousand tons and an area of 196.86 hectares and involved 235,518 households. In the Union. However, the European Union applies strict rules (private standards), especially international market, Indonesian nutmeg is famous for its good quality branding for Banda aspects of health and food safety for all imported products, including nutmeg. European and Siau nutmeg. people's lifestyle that prioritizes health and hygiene encourages the demand for natural Based on the status of the concession, nutmeg plantations are divided into three, namely ingredients in the food content they will consume [6]. Indonesian nutmeg consumption in the Smallholder Plantation (PR), State Large Plantation (PBN), and Private Large Plantation European Union is classified into two types: consumption of dry nutmeg (whole nutmeg and (PBS). Of the three types of exploitation, PBS has not cultivated nutmeg since 2004, while powder nutmeg) and dried mace (whole and refined). Whole dry nutmeg is commonly used the total area of PBN since 2014 has not changed, which is 485 ha.
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