Abstract
The background of this research was on policy issues of continuing increased subsidies for fertilizer and seed rice from year to year, which was also faced the problem of inefficient economic and government budget allocations, the price disparity between input and output and its derivatives result and also the creation of unreal competitiveness as a result of the use of subsidized inputs. This study aims to determine the “protection coefficient” of subsidized inputs (fertilizer and seeds) and output in agriculture rice plants in Indonesia. Policy Analysis Matrix (PAM) is used to analyze the impact of subsidies on rice crop farming system in Indonesia. The analysis result of the Policy Analysis Matrix (PAM), shows that (1) the rice farming system has the profit of market prices and social prices, (2) government policies are simultaneously protective to the production capability, (3) It has a competitive and a comparative advantage.
Highlights
Agricultural input subsidies are a form of rural agricultural development policy which is generally carried out as price subsidies that can be accessed by all rural farmers, or for all producers in certain categories
(4) Nominal Protection Coefficients on Input (NPCI) is 0,40 because the policy is protective against input if the Nominal Protection Coefficient on Input (NPCI) value> 1, it means that government policy is not protective against tradable inputs or subsidy input policies on rice farming provided by the government is not effective in maintaining the system is able to produce with the use of tradable inputs at a social price level, because the use of tradable inputs at market prices is 40 percent lower than their social prices, reducing or eliminating tradable input subsidies may increase produce with the use of tradable inputs at the level of social prices
(6) Effective Protection Coefficient (EPC) is 1,64 because the policy is simultaneously protective if the EPC value> 1, it means that government policies are simultaneously protective on production capability, or producers benefit from government policies on the input and output side together so that they are still able to continue to produce economically at private prices, with a profit rate of 64 percent higher than the level of profit based on social prices, the combination Input and output policies can be more effective in protecting rice farming systems in Indonesia, good coordination between institutions that are closely linked to rice farming systems is absolutely necessary to reduce inter-institutional policy distortions
Summary
Agricultural input subsidies are a form of rural (traditional) agricultural development policy which is generally carried out as price subsidies that can be accessed by all rural farmers, or for all producers in certain categories. The realization of the fertilizer subsidy budget allocation is channeled through fertilizerproducing state-owned enterprises, showing a fluctuating increase from 2008-2015, with the highest subsidy allocation occurring in fertilizer subsidies in 2015 valued at Rp35,70 trillion with a proportion of 51,02 percent of the total non-energy subsidies or 16,83 percent of the total subsidy allocation, this is the biggest subsidy allocation for the last eight years. The realization of the seed subsidy budget in that period was nominally very volatile with the largest value in 2010 amounting to Rp2,17 trillion. In 2011 and 2012, budget allocations declined sharply from 2010 because since 2011 seed subsidies only accommodated price subsidies. This indicates certain strategic considerations in the allocation of seed subsidies during the period 2008 to 2015
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