The Determinants of Nutmeg Export Demand in Indonesia

The Role of Price, Per Capita Income, and Population

Abstract

This study uses regression analysis to examine the relationship between price, demand, per capita income, and population in the nutmeg export market in Indonesia. The results showed that nutmeg price did not significantly affect demand, with a coefficient of 0.071 (β = 0.07, p = 0.5719), indicating that nutmeg demand is inelastic to price changes. In contrast, per capita income significantly affected increasing demand, with a coefficient of 0.000847 (β = 0.85, p < 0.0001). This finding indicates that increasing income drives nutmeg demand. On the other hand, population showed a negative effect on demand, with a coefficient of -0.00039 (β = -0.39, p = 0.0078), indicating a shift in consumption preferences in urban communities, especially among the younger generation who prefer modern and practical products. These findings provide important implications for farmers, business actors, and policymakers. Policies that focus on price stabilisation will not be effective in increasing demand. Instead, strategies should be directed at improving products' quality and added value through quality certification, product innovation, and more vigorous promotion in the international market. Increasing per capita income in export destination countries indicates the need for policies that support market access by reducing tariff barriers and diversifying nutmeg derivative products. On the other hand, innovation of more practical and ready-to-eat nutmeg products and the promotion of nutmeg's health benefits must be encouraged to overcome the decline in demand in urban communities. This study provides strategic insights into the development of Indonesia's nutmeg agriculture and trade sectors, especially in formulating policies that support sustainability and competitiveness in the global market.

Keywords: Nutmeg Price, Export Demand, Per Capita Income, Population