The Effects of 2016-2017 Rice Price Increase on Household Welfare and Poverty in Rural Bangladesh

The Effects of 2016-2017 Rice Price Increase on Household Welfare and Poverty in Rural Bangladesh

<div class="WordSection1"><p>Indonesia’s domestic rice price has experienced a significantly increase when the global price of corps commodity decline. An increase in rice price from 2012 to 2015 had reached 30%. The most acute occurred on the first quarter of 2014 until the last quarter of 2015 that overtake 17%. Increase in domestic rice price will affect mostly to consumer welfare in Indonesia, because as we know, rice is one of the staple food for Indonesian people whom has inelastic demand.</p><p>This paper uses National Socio-economics Survey (SUSENAS) year 2012 and 2014. We revisit McCulloch (2008) and used SUSENAS 2004 to calculate amount of agricultural household in Indonesia. The result of the author’s calculation there was a diminution from 46% in 2004 to 37% in 2012 on the amount of agricultural households in Indonesia. From the total of agricultural household, 19% are the rice-farming households. Surprisingly, 90% of Indonesia’s households are the net consumer whom bought the rice from the market. The result shows that 15% of the total net consumers are the rice-farming households and 10% of net consumers are poor households. This means that if there is an increasing in the price of rice, automatically this household will get influenced include the rice farmers who in fact is also as the rice producers.</p><p>The authors conduct simulation to see the effect of the increase in the rice price towards consumptions that ultimately will alter poverty incidence. Simulation that has been performed uses equivalent variation method to calculate a changing on household consumption as the result of an increase in the rice prices. The result from the simulation of a increase in rice price shows that households in every quantile is affected, ceteris paribus. Authors also including <em>Raskin </em>as compensated consumption when there is an increase in rice prices. These findings suggest that, rice price should be stabilized in order to maintain the society’s welfare and government should establish pro-poor policy especially for food security to prevent the increasing of poverty incidence.</p><p> </p><p> </p><p>Keywords: rice price, poverty, rice farmer, equivalent variation</p><p>JEL Code: I32, Q18</p></div>

The price of rice in the world market greatly influences prices in the domestic market, one of which is the price of rice in Vietnam, Indonesia’s largest rice exporter. The increase in rice prices in Vietnam under the Vietnam Sustainable Agriculture Transformation (VnSAT) program affected the performance of Indonesian rice. This research aims to determine the impact of the VnSAT program on the Indonesian rice version. Data analysis uses simultaneous equations with the two-stage least squares (2SLS) estimation method. The research results show that the effects of the VnSAT program, through an increase in Vietnamese rice prices by 20% and 29%, are relatively small on the performance of Indonesian rice, causing domestic rice prices to decrease by 0.0015% and 0.0030%, rice supply to decrease by 0.0006% and 0.0008%, and demand for rice to increase by 0.000029% and 0.000041%. This implies that external policies from Vietnam did not influence the performance of Indonesian rice, as Indonesia is Indonesia’s largest rice exporter, so Indonesia does not need to worry if there is an increase in rice prices in Vietnam.

This paper studies the implications of high food prices resulting from climate change on food security in small islands, using Mauritius as a case‐study. Climate change may adversely impact prices of agricultural commodities. The study derives and calculates the government costs and the welfare effects of an increase in the world price of rice on consumers in Mauritius. Using an equilibrium displacement model, this study finds that an increase in the price of rice by 35%, as predicted by the literature on climate change and rice prices, will result in an increase of 28.8% in government spending, representing the additional outlays to support the subsidy scheme for food security. Using 2012 as the baseline, the welfare analysis results suggest that consumer surplus for ration rice consumers increases by 626 million Mauritian Rupees (MUR) or US$18 million while consumer surplus decreases by MUR454 million (US$13 million) for basmati rice consumers.

In rural Bangladesh, a great challenge is to tackle the low pay, poor-quality jobs that are unrecognized and unprotected by law, widespread underemployment, the absence of rights at work, inadequate social protection, and the lack of representative voice. There is no denying the fact that efficient labor markets can contribute to raising the quantity and quality of employment. However, there remains a big question whether poverty in rural Bangladesh is concentrated in certain employment categories. Against this background, this paper examines the link between different forms of employment and well-being of rural households in Bangladesh. This paper uses the data from the Bangladesh Integrated Household Survey (BIHS) of IFPRI. This data are nationally representative data of rural Bangladesh for the year 2011–2012 where the sample size is 6,500 households in 325 primary sampling units (PSUs). The reason for using the BIHS database for this study is that this is the latest available survey data on rural Bangladesh. This study has attempted systematic analysis in understanding the association between employment status and well-being of rural households in Bangladesh. From the BIHS data, the study has used consumption expenditures as the principal indicator of household economic status or well-being and has used per capita consumption expenditure as the proxy for income. The total consumption expenditure is measured as the sum of total food consumption and total nonfood expenses excluding lumpy expenditures. Income (expenditure) deciles have been created by dividing the households into ten groups from the lowest to the highest in terms of households’ total income. Employment statuses have been constructed for those household heads who are able and eligible to participate in the labor market. By definition, the labor force consists of everyone above the age of 15 who are employed (including individuals working without pay) or unemployed but actively seeking employment. Household head, not counted in the labor force, includes students, retired people, disabled people, and discouraged workers who are not seeking work.

Rice is a major food commodity in Indonesia and plays an important role in people's daily lives. The increase in rice prices can have a complex impact on farmers' incomes. Although it sounds like a profitable thing, the increase in rice prices can also mean higher production costs for farmers, such as more expensive fertilizer and seed prices. In addition to having an impact on farmers' income, the increase in rice prices can also affect the economic welfare of farmers. The economic welfare of farmers is not only related to the income earned but also to the farmer's expenses in each harvest period. The study aims to determine the impact of the increase in rice prices on the income and welfare of rice farmers in Klaten. Data collection was carried out using the interview method with rice farmers in the Sri Makmur Dk. Tempel Farmer Group, Jogosetran Village, Kali Kotes, Klaten. Data analysis was conducted by analyzing costs, revenues, income, and welfare analysis by comparing income and expenditure of farmer households. The results indicate that although farmers' income has increased, their welfare has not improved significantly due to rising production and household costs. This study emphasizes the importance of policies that not only regulate commodity prices but also improve production cost efficiency to enhance farmers' welfare.

The volatility increase in rice prices has already started since August 2022 where this condition continues until 2023. This increase in rice prices brought a negative sentiments to rice producing companies such as HOKI and NASI in their Net Profit Margin. Therefore this research focuses to provide insights for investors and companies on the impact of volatilities increase in rice prices to financial performances of rice producing companies that listed in IDX. By using quantitative research methods and analyzing various financial ratios, the research investigates how rising rice prices affect the profitability, efficiency, and market performance of these companies. The results indicate that the volatility in rice prices negatively impacted the financial performance of rice-producing companies listed on the IDX in terms of profitability. However, it had a mixed impact on marketability and efficiency with the data showing positive differences. Benchmarking with companies from other countries also suggests areas for improvement for the companies studied.

This study aims to analyze consumer behavior related to the increase in rice prices after the 2024 election in Surakarta City. The increase in rice prices is often an important issue in the context of the household economy, especially for consumers in urban areas such as Surakarta. Data of this study was obtained by a survey method that includes a quantitative approach from a sample of households in various sub-districts in Surakarta City. Through the analysis of the data obtained, this study explores the impact of rising rice prices on consumption patterns, changes in household budgets, and adaptation strategies implemented by consumers. The study's conclusions demonstrate that consumer spending patterns are not considerably impacted by the rise in rice prices following the election. In addition, the economic impact of the increase in rice prices also causes changes in household budget allocations, where consumers tend to prioritize spending on other basic needs. This study provides insight into how changes in food prices affect the economic well-being of households and provides recommendations for policymakers to consider interventions that can mitigate the negative impact of food price fluctuations

The social problems faced by society today are related to the drastic increase in rice prices from previous prices. The increase in rice prices certainly affects the pattern of food consumption in the community. Grouping people based on income (low, medium and high) is done because income levels affect people's consumption patterns. This shows that the impact of rising rice prices will be addressed differently according to income level. The government still has not found a solution to the current rice price reduction. The purpose of the study was to determine the increase in rice prices in Indonesia.The study used secondary data.the process of searching for this data through internet media to obtain information based on journals and articles.the results showed that low-income groups are still more dependent on rice as a staple food than other community groups. The lower the income, the proportion of rice consumption will tend to increase and vice versa, the higher the income, the proportion of rice consumption will tend to decrease

Rice is the main food need of the Indonesian people. The price of rice in Gunung Pati, Semarang has increased to touch Rp. 18,000.00/ kilogram. The increase in rice prices at the beginning of 2024 is a serious problem that must be addressed immediately. The purpose of this study is to analyze the factors that influence the increase in rice prices, the impact on society, and find solutions. The methods used are quantitative, literature studies, and government data. This article data collection technique is through questionnaires and literature studies through books, articles, and several scientific journals. The result of this study is the increase in rice prices caused by the natural phenomenon of El Nino, floods, and crop failure. To address this issue requires a comprehensive effort from the government, private sector, and society. From this study, it can be concluded that the increase in rice is a complex problem and greatly affects economic stability.

Indonesia is experiencing an increase in rice prices nationally, especially in West Nusa Tenggara. The NTB Province Central Statistics Agency (BPS) stated that the increase in rice prices in NTB in September 2023 will reach 46 percent. This increase was due to the impact of the long dry season or El Nino. This quite high increase in rice prices caused inflation in NTB. This research aims to determine the practice of increasing rice prices in the people of Nusa Tenggara Bara. The type of approach used in this research is a descriptive qualitative approach. Data collection in this research method uses observation and documentation methods. The research results show that West Nusa Tenggara is experiencing a rice surplus. Still, the reality is different from the real conditions, namely price increases in the region, so there needs to be serious monitoring, including from a policy perspective, especially restrictions on outbound rice distribution. Because what takes priority first is the needs of the local community which must be met. The increase in rice was caused by national prices not being the same as regional conditions, which caused price increases. In a market mechanism, the demand and supply sides must be balanced. Islam provides the view that the interests of the ummah are more important than other needs.

This study investigated the changes in poverty of rural households in Bangladesh in the post-liberalization era. The study used household survey data from secondary sources and calculated poverty indices, decomposition, and elasticity. The study found that income distribution across rural households was uneven in the post-liberalization period. Although agricultural trade liberalization generated significant growth, inequality also increased and the rich gained more from this growth than the poor. Therefore, poverty reduction in the post-liberalization period was not as significant as the economic growth. Among rural households, non-farm households gained more than farm households from post-liberalization growth because of a relatively large reduction in consumer price compared to increases in productivity of rice. Similarly, net buyers gained more than net sellers from a large reduction in rice price. The study suggests that holding inequality constant at the 1985–1986 level, rural poverty in Bangladesh could be reduced to zero with the growth experienced during 1985–1986 to 2005. The study argues that a reduction in poverty at a substantial level is a big challenge for policymakers because of an increase in inequality along with economic growth. Therefore, the government should formulate policies to reduce inequality in order to reduce poverty significantly.

PurposeConsidering the significance of rice as a staple food in Indonesia, this study aims to analyze the impact of various factors, i.e., domestic price production level, exchange rate, international rice price, and Gross Domestic Product (GDP) per capita, on domestic rice prices and the resultant disparity in income distribution and inequality in the country. MethodsA simulation analysis has been performed to assess the impact of the above-mentioned factors on rice prices and the resultant income disparity in Indonesia. For that, input data from 2006 to 2020 was used to depict the change in domestic rice prices from 2021 to 2026 due to independent variables changes. FindingsResults revealed that a regular increase in rice production decreases rice prices in the longer term. Besides, a rise in the exchange rate decreases rice prices, and a fall in the exchange rate results in higher rice prices. Results also showed the insignificant impact of international rice prices on domestic rice prices in Indonesia. In contrast, an increase in per capita income reflected an increase in rice prices. Moreover, the result of the study exemplifies that the expenditure for rice has a very low elasticity (0.0975) compared to the expenditure on non-rice food (0.4096). More than half of the total household expenditure (50.71%) is spent on food, while the rest (49.29%) is used for non-food. The increase in rice prices affects the rise of income amongst farmers and declines the income of non-farmers. Hence it affects the decline of disparity in households' income distribution. Originality/valueThis study adds value to the existing literature with several implications for practitioners, policymakers, and government organizations to take necessary measures to stabilize rice prices and income distribution among the various income groups.

Poverty is often identified in developing countries. One measure of poverty is the ability to fulfill basic needs, particularly food needs. On the other hand, food needs are very sensitive to changes in inflation. The more fluctuating inflation will change the prices of necessities, which then exacerbate poverty conditions. Using time-series data for the period 2005-2016 and using the Ordinary Least Square method, this study examines the impact of changes in the prices of necessities on poverty levels in North Sumatra. The results showed that the increase in rice prices, sugar, cooking oil, beef, and salt had an impact on the poverty level in North Sumatra, while the increase in the price of eggs and kerosene was the opposite. The increase in rice prices significantly impacted all of the commodities studied than for other commodities, followed by salt, sugar, beef, and cooking oil. Changes in the ability to consume basic needs indicate a decrease in people's purchasing power. Further, this indicates that the change in consumption of these various commodities also means that the poverty rate tends to increase.

This research aims to find out the government's role in stabilizing rice prices. This research focuses on what things are being done by the government, in this case Perum Bulog and Disperindag, Central Sulawesi to reduce the increase in rice prices. The method used is qualitative. Collection uses observation, interviews, documents and internet searching. The location of this research includes the city of Palu, Kab. Parigi Moutong, Kab. Donggala, and Kab. Sigi. The theory used is the role of government in the economy based on its activities which consist of the role of government as regulator, producer and consumer. The results of the research show that the government's role is not optimal, it can be seen from the government's role as a regulator, to implement various policies and programs, the government has a basis, namely the government purchasing price (HPP) and the highest retail price (HET), which then created the SPHP rice program by Bulog and cheap market by Disperindag. The role of the government as a producer, the government has constraints or problems with the amount of rice stock, the lack of stock it has means that the efforts made do not run optimally so that it has not been able to stabilize or withstand the increase in rice prices. The role of the government as a consumer, the government has difficulty absorbing local rice and imported rice, HPP regulations seem to make it difficult for the government because prices at the milled farmer level are high above HPP and importing countries impose export restrictions and some even stock exports.