Factors Affecting The Volume of Indonesian Coffee Export to The International Market

Abstract

Agriculture is a sector that plays a vital role in economic activity in Indonesia. The contribution of agriculture to Gross Domestic Product was around 12.72 percent in 2019, which is the third-largest proportion after the Manufacturing Industry and Wholesale and Retail Trade at 19.70 percent and Car and Bicycle Repair Motor by 13.01 percent (BPS, 2020). As one of the largest coffee exporters in the world, Indonesia has significant destination countries in exporting coffee beans. The ten countries that are the main markets for Indonesian coffee beans are the United States, Germany, Japan, Italy, Malaysia, England, Egypt, Belgium, Algeria, and India. From year to year, Indonesian coffee exports continue to fluctuate. This becomes a question, what factors affect Indonesian coffee exports to the international market. This study aims to identify the factors that influence changes in the volume of Indonesian coffee exports to major importing countries (the United States, Germany, Japan, Italy, Malaysia, England, Egypt, Belgium, Algeria, and India). The data used in this study is panel data from 2000 to 2019. The method used in this study is Panel Data Regression with a Fixed Effect Model (FEM) approach to determine whether the independent variables in this study have a significant effect on coffee exports and how the relationship between the dependent and independent variables partially. Based on the data processing carried out, it was found that Gross Domestic Product (GDP), exchange rate, and retail prices of importing countries significantly influence in a negative relationship the volume of Indonesian coffee exports to export destination countries. The Great depression in 2008 has a positive and significant relationship with the dependent variable. Meanwhile, other variables, namely the volume of production, and variable of government intervention in 2012, did not significantly affect the volume of Indonesian coffee exports.