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Market-Approach-Based Policy to Achieve Rice Price Stability in Indonesia—Can It Be a Complement?

Author

Listed:
  • Topan Ruspayandi

    (School of Business, IPB University, Bogor 16151, Indonesia)

  • Tajuddin Bantacut

    (Department of Agroindustrial Technology, Faculty of Agricultural Engineering and Technology, IPB University, Bogor 16680, Indonesia)

  • Bustanul Arifin

    (Department of Agribusiness, Faculty of Agriculture, University of Lampung, Bandar Lampung 35141, Indonesia)

  • Idqan Fahmi

    (School of Business, IPB University, Bogor 16151, Indonesia)

Abstract

Food price volatility broadly impacts the country’s food security. Rice price stabilization in Indonesia is carried out by BULOG, the food state-owned enterprise (SOE) that the WTO has identified as Indonesia’s state trading enterprise (STE). This study was conducted to evaluate the price stabilization program in Indonesia by reviewing the efforts that have been made and analyzing the factors that influence the price of rice at the consumer level using Autoregressive Distributed Lag (ARDL) analysis. The analysis showed that BULOG’s market share affected consumer-level rice prices with a negative coefficient sign, which means that the larger BULOG’s market share, the lower the price of rice will be. Other variables that affect the price of rice at the consumer level are the price of rice itself at the previous time lag, the producer-level paddy price, rice production, rice consumption, and BULOG’s operational rice stock. On the basis of the results of these studies, to realize the stabilization of rice prices in Indonesia, the government can complement stock management through a public policy approach with market-approach-based policies by optimizing the role of Food SOEs as market players in the rice industry.

Suggested Citation

  • Topan Ruspayandi & Tajuddin Bantacut & Bustanul Arifin & Idqan Fahmi, 2022. "Market-Approach-Based Policy to Achieve Rice Price Stability in Indonesia—Can It Be a Complement?," Economies, MDPI, vol. 10(12), pages 1-19, November.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:12:p:296-:d:984426
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    References listed on IDEAS

    as
    1. C. Peter Timmer, 2014. "Food Security in Asia and the Pacific: The Rapidly Changing Role of Rice," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(1), pages 73-90, January.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    3. Hyun Son & Nanak Kakwani, 2009. "Measuring the impact of price changes on poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(4), pages 395-410, December.
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