The Impact of Rice Import Policy on Community Economic Welfare in East Java

Abstract

This study aims to identify policies, levels of imports, production and consumption in East Java, to analyze the impact of rice import tariff policies on production and consumption and also the community welfare changes in East Java. The data that used in this study are secondary data from the Central Statistics Agency (BPS), BULOG, and other research. The method of analysis uses the 2SLS simultaneous equation and the economic surplus simulation. The results showed that from 2004 to 2018, East Java always had a higher rice production rate than the consumption, but still continued to do rice import to maintain price stabilization. The simulation of a tariff increase causes an increase in production and a decrease in consumption, and vice versa. Liberalization of the rice trade (tariff exemption) has led to greater economic welfare, but from a distribution point of view, producers receive a smaller surplus than consumers, which means that the benefit distribution aspect of government policies is not realized, so the government must pay more attention to producer surpluses and consumer surpluses without much disadvantage one of the parties.