Abstract
Indonesia’s economic policies cannot be separated to its rice policies since rice is the staple food for Indonesian people. The paper aims to find out the impact of rice import tariff policies on rice demand and supply in Indonesia. The research uses time series data in 1981-2018. Data obtained are analyzed using econometric model with simultaneous equation system. Estimation results show that rice supply was positively and significantly influenced by grain rice price in farmer level, amount of rice production, and rice supply of the previous year. Meantime, domestic rice demand was negatively and significantly influenced by domestic rice price and positively and significantly influenced by domestic rice demand of the previous year. The result of policy simulation indicates that scenario of policy combination through an increase in rice import tariff and government purchase price brings a sizeable impact on the increase in domestic rice production and rice demand and supply. Therefore, Indonesia needs to conduct protection to farmers in the form of rice import tariff imposition as well as government purchase price.
Highlights
Rice product is the main food product for Indonesian people
The magnitude and expected variable signs: e1, > 0;e2,e3
Indonesian rice plant productivity increased by 0.21 percent, Indonesian rice supply decreased by 0.11 percent, domestic rice demand decreased by 0.07 percent, grain rice price in farmer level increased by 0.28 percent domestic rice price increased by 0.18 percent
Summary
Rice product is the main food product for Indonesian people. rice has important meaning for Indonesian people from the following stand points: First, rice is the main food it must continue to be available in a sufficient amount to fulfill people demand on rice; and second, rice is an employment source as well as income source for most of population, especially in rural areas. The rice production equation is: Indonesian Rice Supply and Demand Rice supply is assumed to be influenced by grain rice price in farmer level, the amount of domestic rice production, the amount of rice import, world rice price, and rice supply of the previous year. The magnitude and expected variable signs: e1, > 0;e2,e3
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