The Role of Cocoa Sector in The Indonesian Economy: An Input-Output Analysis

Abstract

Agriculture is a potential sector in supporting economy and national income. This is because Indonesia has a comparative advantage. The agricultural land is still widespread and most people still rely on agriculture for their livelihood, and agriculture is a renewable business. So that this sector can stand for an indefinite period. This agriculture is including livestock farming, forestry, fisheries, and tree crop. One of Indonesia's agricultural commodities are cocoa. Cocoa is one of tree crop commodity sector that have a vital role to the national economy. Cocoa is one of Indonesia's main export commodities in producing national wealth. The existence of Indonesia as a major of cocoa producer in the world shows that Indonesian cocoa is feasible to count and have a chance to dominate the global market. The research objectives are to analyze the role of the cocoa sector in the Indonesian Economy (intermediate demand and final demand), gross value added, and the structure of exports and imports; analyze forward linkage and backward linkages; analyze coefficient of dispersion and sensitivity of dispersion; and analyze output multiplier and income multiplier effect seen from the cocoa sector in the national economy. The data used in this research is a secondary data. The data used were derived from the Input - Output Table of Indonesia domestic transactions on the basis of producer prices in 2005, 175 sector classification from Statistics Indonesia which is then aggregated into 22 sectors. Several other secondary data obtained from government agencies and other relevant agencies. The use of Input - Output Table of Indonesia in 2005 is due to a new table for this study took place. Data is processed by utilizing Input-Output Analysis for Practitioners (IOAP) Complementary Version 1.0.1. and Microsoft Excel. The results shows that the cocoa sector has a positive contribution to the establishment of Indonesia's GDP. Cocoa sector has a backward linkage higher than the forward linkage. This suggests that the cocoa sector has a greater ability to output to be used as inputs in other sectors than the output of the cocoa sector to be used as input for other sectors. Cocoa sector has a coefficient value higher than the sensitivity dispersion. This suggests that the cocoa sector increase its upstream sector highly than the downstream sector. Based on the analysis of output and income multipliers can be concluded that the cocoa sector has a considerable multiplier effect on economic output and incomes in all sectors of the economy in Indonesia. Cocoa sector is ranked the 20th priority sector. While the first priority sector is other tree crops sector.