The Shallot Pricing in the View of Import Restriction and Price Reference

As per January - August 2013, the Government of Indonesia (GOA) has regulated a quota-based import restriction policy for importing shallot. This policy has produced an effect to the shallot price that rose significantly in spite inflation occurred. In order to control the inflation rate, on 2 September 2013 the government changed the import restriction policy, from quota based into price reference based as stated in a decree of the Director General of Domestic Trade No.118/PDN/KEP/10/2013.The price reference of shallot was counted at IDR 25,700/kg, and discounted at IDR 11,935/kg at the farmer level. The aim of this research is to determine the price reference of shallot import restriction that suit for protection of farmer profit of shallot farming. The method of analysis used in this research is Policy Analysis Matrix (PAM). The results shows that the implementation of price reference policy with the price at IDR 11,935/kg at farmer level has decreased the farmer protection and profitability for 46% and 233%, respectively. This decreasing was caused by the price reference of shallot at the retailer level. It is discussed that the price reference of shallot should be increased at least to IDR 15,260/kg at the farmers level to achieve a higher rate of protection and profit that would be most beneficial to farmers.