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The Rise in International Food Prices: The Impact on and Policy Implications for Indonesian Food Security

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  • Oktaviani, Rina
  • Asmarantaka, Ratna W.

Abstract

The rise of international food prices have always been a challenge for Indonesia, especially when they apply to products important for food security. The impact of increased price on Indonesian macro and sectoral economic performance is evaluated with a computable general equilibrium model for Indonesia. In addition, a simultaneous equations model (2SLS) is used to assess the economic behavior and the impact of increased price at the farmer household level. The results reveal that increased price is associated with an increase in real GDP, real household consumption, real wages of farmers and the consumer price index, and sustained food security for rice and maize. However, for soybeans higher prices led to decreased food security because of the high import share. At the level of Farmer Households (RTP), an increase of international food prices is associated with increases in consumption, farm wages and income. The policy of strengthening Indonesian food security can be implemented through coordinated agricultural policy within central and local governments, improvements in agricultural infrastructures and institutions, and by strengthening and adopting research and development to improve food crop productivity.

Suggested Citation

  • Oktaviani, Rina & Asmarantaka, Ratna W., 2010. "The Rise in International Food Prices: The Impact on and Policy Implications for Indonesian Food Security," Conference papers 331963, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331963
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