International Conference in Padjajaran University

This paper have published in Proceeding International Conference on Small-Scale Producer Agency in the Globalised Market – University of Padjajaran and CAPAS (Center for Agrifood Policy and Agribusiness Studies) – Bandung, 16 February 2012





Fanny Widadie

Agriculture Faculty  Agribusiness – Socio Economic Department

University of  Sebelas Maret Surakarta


The government has published rice policies which are production, distribution, import and price control. All the policies are aimed to achieve food security. Now, Indonesia have the problem to rice development such as high dependence of rice consumption (139 kg/kap/year), global warming, degradation of area productivity, field conversion and decline of rice source content. The obstacle challenge from outside is trade liberalization (GATT/WTO agreement that will be deleted import rate) that will make integration between domestic rice market and world rice market in globalization. Because rise is mainly foods that have strategic and important value to increase food security, so this research will analysis rice economic phenomena with making of rice economic model that are include supply, demand, rice price and market integration also policy simulation to achieve rice development in globalised market.

Data analysis is using inferential with econometric approach. First step are used statistic model test (stationer and autocorrelation). Market integration analyses are use cointegration-test which are Johansen-Juselius (JJ) test, Engel-Granger approach and Error Correction Model (ECM). To identify the effect of government policy to rice price fluctuation are used simulations with history data for scenario of areal increase policy 10% and 20%, technology increase 10% and 20%, fertilize price increase 10% and 20% and rate of exchange increase 10% and 20%.

Research result shows that (1) there are integration between domestic rice prices with world rice price. It was showed from cointegration-Johanses test r > 1. The result of Error Correction Model (ECM) was explained that the level of integration is weak; the world price is getting low effect toward domestic price fluctuation in long and short time. (2) Factors those influencing rice productions are harvest area and technology level. Rice imports are influenced significantly by production and rice demand. Demands of rice are influenced by amount of people and income level. And the last, price rice is influenced by rate of exchange and price rice of a year before. (3) The result of government policy effect toward rice price fluctuation in domestic there are: (a) harvest-are increase policy as 10% and 20% will make decrease rice price amount of 0.149% and 0.451%. (b) Technology increase policy as 10% and 20% will make increase rice price amount of 0.136% and 0.274%. (c) Fertilize increase policy as 10% and 20% will make increase rice price amount of 0.0107% and 0.0249%. (d). Decrease rate of exchange policy as 10% and 20% will make increase price rice amount of 2.5517% and 4.9754%.

Suggestion of this research is the governments have to make the policy of rice improvement to face globalised market. The policies to increase rice production are use harvest-area and productivity of rice improvement. Besides it, diversification of food consumption policy are purposed to decrease rice demand. The government have to increase food technology no rice. The policy of rice price is use optimal supply sector, which are increasing of harvest-area, technology, fertilize subsidy and monetary stability-rate of exchange to dollar.

Key word: rice, market integration, policy, simulation, food security 

Full Paper Download: Proceeding-International Conference