Response Analysis of Tobacco Supply in Indonesia

Abstract

Tobacco is one of the important plants in Indonesia. The control of tobacco and fewer incentives on tobacco production caused the growth production of tobacco slowly. It impact to the decrease of farmers' income. The objects of this research are to analyze factors that influence tobacco supply in terms of planted area and quantity of tobacco production, also to analyze the response of tobacco supply cause the factors influencing. The method of the research used a descriptive method by using time series secondary data for 30 years from 1990 to 2019. Data are taken from some institutions and literature. The analysis method used partial distributed lag Nerlove's model that is popular in supply response studies which used Ordinary Least Square. Results indicated that tobacco supply response to the wage of labor, planted area, and trend of technology. Tobacco production in Indonesia not only positively influenced to variables of tobacco area, and trend of technology but also response to these variables. Therefore, extensification and intensification are need it to increase tobacco supply.