Ray Trewin

The Social Welfare Impact of Indonesian Dairy Policies

The Indonesian dairy sector remains highly regulated, in spite of trade and investment policy reforms elsewhere in the economy. The regulations, aimed mainly at fostering development of local industry, include an import ratio requirement (BUSEP), import tariffs; an import licensing scheme, and restrictions on investment in milk processing The paper shows that the current policy mix has resulted in a significant increase in numbers of dairy cattle and dairy farmers, and in fresh milk and end-product output. However, this policy mix imposes costs. The analysis indicates that the economy, and in particular domestic consumers, would gain if dairy trade and investment restrictions were lessened. The gradual movement towards a more deregulated dairy sector is a necessary condition for improved efficiency and a strengthening of Indonesias competitive position in the world dairy market.

Analysis of Chinese and Indonesian Food Policy Options

China’s food problems were broader than just food supply—a focus of Lester Brown (1995). These broader problems include the lack of variety in Chinese food consumption, uncertainty about China’s food trade and its impact on world markets, the impact of agriculture and associated activities on the environment, and the exploding budget costs of current agricultural policies. An especially significant food problem in China’s rapidly changing economy made evident by earlier research was that the current self-sufficiency policies actually constrain diverse production and raw material trade, and impact negatively on the development of broader food self-sufficiency and the competitive production and trade of more value-added products (Trewin 1996b). This chapter aims to highlight aspects of China’s food problems through drawing on the situation of another large country—Indonesia in particular—by analysing food policy options relevant to both countries within a global trade framework.