Household food expenditures patterns in urban Java, Indonesia : a thesis presented in partial fulfilment of the requirements for the degree of Masters in Agricultural Economics, Massey University, Palmerston North, New Zealand

Indonesia's economic growth over the past two decades has been impressive compared to many other developing countries. This growth has been achieved through both industrial and agricultural development and has resulted in substantial increases in GNP per capita, despite substantial population growth. Increasing per capita GNP, together with increased population, is driving the demand for agricultural food products, particularly higher protein foods such as meat and dairy products. This study investigates factors affecting household expenditure on foods, and estimates elasticities for all-food, rice, vegetables, meat and milk, with a view to examining export market opportunities in Indonesia for the New Zealand meat and dairy industries. This study uses the 1990 National Social and Economics Survey (SUSENAS) and focuses on urban areas in five provinces in Java; Jakarta, West Java, Central Java, Yogyakarta and East Java. Compared to other provinces, these provinces are centres of development in Indonesia and hence seem potential markets for New Zealand products. Survey households are grouped into four clusters based on the number of adults, the number of teenagers, the number of children, average adult highest education level and average adult age. Engel functions are then estimated for households in each cluster. Results are used to identify potential markets for New Zealand meat and dairy products. Results of this study indicate that average households in all clusters consider all-food, rice and vegetables to be normal goods, while meat and milk are considered luxuries. Results also suggest that, despite rice being a staple food in Indonesia, with increasing per capita income, rice will become an inferior good. This study reports relatively high expenditure elasticities for meat and milk, hence strong demand for these products can be expected in the future as household incomes increase. With increasing per capita incomes, households can be expected to increase intake in protein relative to starch and carbohydrate rich foods. From a New Zealand perspective, future market opportunities for meat and dairy products in Indonesia appear to be substantial, particularly for the younger, better educated and higher income market segment