AGRICULTURE TENDENCY INDEX IN INDONESIA: PROGRESS AND CHALLENGES BPS-Statistics Indonesia AGRICULTURE TENDENCY INDEX IN INDONESIA: PROGRESS AND CHALLENGES Third International Seminar on Early Warning and Business Cycle Indicators 17-19 November 2010, Moscow, Russian Federation (KECUK) SUHARIYANTO Director of Analysis and Development of Statistics, BPS-Statistics Indonesia email: kecuk@bps.go.id

INTRODUCTION Business Tendency Survey (BTS) is aimed to collect prompt information on general tendency of business over the recent past, near future and current situation. Three organizations has conducted BTS in Indonesia: BPS-Statistics Indonesia, Bank of Indonesia, Danareksa Research Institute (DRI) They ask some similar variables and produce related indicators, but different in other aspects (methodology, type of variables and period covered). BPS-Statistics Indonesia has conducted quarterly Business Tendency Survey since 1995  restricted to greater Jakarta area.

INTRODUCTION Started in 2001, BPS has collaborated with Bank of Indonesia  merge the questionnaires, conducted in almost all provinces, cover 9 sectors, number of sample 2500 firms (280 firms in agriculture sector) Data collection: interview and mailing system, response rate: 70-80%. Sampling method: Stratified sampling with stratification by sectors, regions, and size in term of production, sales or income The results are released quarterly with the GDP figures  disseminated in website, free of charge (www.bps.go.id). Since BTS survey contain and business category are parallel with GDP sectors, it is useful to predict the GDP growth

VARIABLES USED TYPES OF INDEX VARIABLES Current Business Tendency Index (CBTI) 1. Business income 2. Production capacity 3. Average working hours Future Business Tendency Index (FBTI) 1. Domestic order 2. Foreign order 3. Selling price 4. Order for input/raw material The survey uses qualitative questions asking for an assessment or change of variables. Most questions make use of period of three months.

METHODOLOGY The score is given to each selected variables: “increase”=2, “same”=1, “decrease”=0. For each variable, calculate total score (TS): CBTI and FBTI are calculated independently: CBTI or FBTI The values of CBTI and FBTI are between 0-200: BTI > 100: the business condition is better BTI = 100: the business condition is stagnant BTI < 100:the business condition is worse

Indonesian Economy During Global Crisis Figure 1. Export, Import and GDP Growth 2007-2010 The impact of global economic and financial crisis in Indonesian economy started in effect in October 2008. It was shown by decreasing in exports and import values and GDP growth

BTS During Global Crisis Figure 2. Total BTS, BTS Manufacturing and BTS Agriculture 2006-2010 BTS also decreased in Quarter-4, especially for manufacturing sector. Third International Seminar on Early Warning and Business Cycle Indicators

Comparison of GDP and BTS in Manufacturing Sector. 2006-2010 The BTS and GDP growths in manufacturing sector has similar pattern Third International Seminar on Early Warning and Business Cycle Indicators

Comparison of GDP and BTS in Agriculture Sector, 2007-2010 The BTS and GDP growths in agriculture sector has different pattern, especially in Q1 and Q4. In Quarter-1, GDP growths are always positive due to high agriculture production (highest harvest season), in Quarter-4 it is always negative Coverage of BTS is only agriculture firms, coverage of GDP includes agriculture households. In Indonesia, majority of agriculture production, especially food crops, is produced by households.

Harvested Area and Production of Rice, 2009 Harvested Area (Million Ha) Production (Million Tons) Third International Seminar on Early Warning and Business Cycle Indicators

Comparison of GDP and BTS Growths by Sector Quarter 1-2009 Quarter 3-2010 In general, GDP and BTS growth by sector has similar pattern. However, the pattern for agricultural sector is different in Quarter-1 and Quarter-4.

CONCLUSION AND FUTURE PLAN In general, BTS is a good indicator to predict business tendency in Indonesia. However, Agriculture Tendency Index has different pattern with agriculture GDP growth due to different coverage. How do we solve this problem? FUTURE PLAN Improvement of methodology: Increase number of sample and coverage  use the most recent sampling frame. To meet users’ demand, the estimation should be presented until province level. Questionnaire content and design Find more appropriate weights used in calculation of the index Need special method in agriculture sector? More relevant variables for agriculture? Improvements of data gathering and processing. Improvements of dissemination of the survey results.

Thank You TERIMA KASIH Third International Seminar on Early Warning and Business Cycle Indicators

Comparison of GDP and BTS Growths 2007-2010 The BTS growth has similar pattern with GDP growth except in Quarter-1. GDP growth in Indonesia is heavily influenced by agriculture and manufacturing sectors. Their shares to total GDP are 16% and 25% respectively. In Quarter-1, GDP growths are always positive due to high agriculture production (highest harvest season).