Free Trade and Goverment Policy Implication over Performance of Domestic Fruit Trade in Indonesia

Free trade is one most important process upon the international trade liberization. Ont its implementation, many trading aggreement, has already predicted will force many implication to domestic trading performance. Tax, tariff and other international trading barriers elimination, as included in mostly internetional aggreement, will increase foreign product infiltration on domestic market. Undeniedable, domestic market will held more competition between domestic and foreign product. Free trade policy over domestic fruit market in other case has the same impact like other product. The positive as well as negative impact may occur. Negative response mostly will shown in decreasing of local fruit demand, which may drive to decreasing of price and decreasing farmer motivation on local fruit cultivation. Thus some research on impact of free trade policy will have important role to generate the bases for developing strategic action to overcome the negative impact and sustaining local fruit trading performance.

The objective of this research is ; (1). Analyzing and learning how is Indonesian local fruit trading performance on the domestic market will response under progressive implementation of free trade aggreement, which drive the increasing number of imported fruit. (2). Analyzing and learning how is Indonesian local fruit trading performance on the domestic market will response under many implementation of goverment policy givent to overcome free trading process.

This research were using secondary data, which include many time series data, collected from Departemen Pertanian, Departemen Industri dan Perdagangan, Direktorat Bea dan Cukai, Bank Indonesia, FAO dan Gabungan Pengusaha Makanan dan Minuman Indonesia (GAPMMI). Measured data were consist time series data over 1980-2005 periods. The model construction on this research is dynamic models which estimated with OLSQ (Ordinary Least Square) methods, (and if needed estimated with 2SLS method). This research will consist eksogen and endogen variable to draw all constructed models. To answer the objective, this research has already constructing 34 simultneously expression models.

The research results; (1). Free trade implementation has giving implication upon; (a). inreasing slope of apple, orange, banana and papaya imports quantitiy (b). decreasing of total local fruit domestic supply (c). dereasing number of mango, banana, orange and papaya cultivation area (d) decreasing of banana and papaya cultivation productivity (e). increasing of farmer price for mango, banana and papaya. (2). Government policy to overcome free trading process, has giving implication upon; (a) disresponse of producers price over GNP change (b). positive response of producers price on population increment, (c). disresponse of cultivation productivity over Agribusiness Investment change (d). disresponse of cultivation productivity over export tariffs change (e). disresponse of cultivation productivity over farm finance facilities change (f). disresponse of cultivation productivity over Interest Rate change (g).significan response of orange and papaya cultivation productivity over farm wages change.