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International Journal of Science and Research (IJSR) ISSN (Online): 2319-7064

Index Copernicus Value (2015): 78.96 | Impact Factor (2015): 6.391

Volume 6 Issue 10, October 2017

www.ijsr.net Licensed Under Creative Commons Attribution CC BY

The Effectiveness of Rice Price Stabilization Policy

In Indonesia

Desi Aryani1,2

, Ronnie Susman Natawidjaja1, Trisna Insan Noor

1, Andy Mulyana

2

1Padjadjaran University, Faculty of Agriculture, Bandung 45363, Indonesia

2Sriwijaya University, Faculty of Agriculture, Palembang 30862, Indonesia

Abstract: Instability of rice prices in Indonesia is shown from the increasing price disparity between Indonesia's rice price and

international rice price. Stabilization of food prices is one of the priority policies of the government. The instruments of rice price

stabilization should be integrated and measurable. The purpose of this research is to analyze the effectiveness of rice price stabilization

policies that have been implemented by the Indonesian government in the period 2010 to 2015. The data used in this study were

monthly time series data from January 2010 to December 2015. Data were collected from Indonesia’s Agency for Logistics Affairs and

Indonesia’s Ministry of Trade. This research used multiple regression analysis model. The results show that the three policy

instruments of rice price stabilization ie rice HPP, market operation, and rice import are right to control rice price. However, market

operation and import policy instruments have not been effective in stabilizing rice prices. To be effective, it is necessary to market

operation and rice import policy right in timeliness and quantity in the implementation of the policy.

Keywords: stabilization, rice HPP, market operation, rice import

1. Introduction

Rice is the biggest expense for the poor in Asia. Instability of

rice prices leads to less prosperous communities unable to

regulate their consumption levels at higher prices (Dawe and

Timmer, 2012). High rice prices cause losses in most

Indonesians, especially the poor (McCulloch, 2008). In 2013,

the number of poor people in Indonesia is reached

28,553,930 people with a percentage of 11.47 percent (BPS,

2014).

Instability of rice prices in Indonesia is shown from the

increasing price disparity between Indonesia's rice price and

international rice price, where the price of Indonesian rice

continues to rise every year while in mid 2013 the price of

international rice tends to decrease. The average standard

deviation of Indonesia's rice price for the 2010-2014 period

of 1,002.62 is also higher than the international price

(816.00). It is indicating that the rice price in Indonesia is

more volatile than the international market.

Stabilization of food prices is one of the priority policies of

the government. Accessibility to rice can be seen from the

stability and price of rice. Affordable food prices do not

mean that food prices should always be cheap, because the

policy proves to be causing many losses to farmers and

national food security capabilities (Husodo, 2003).

According to Arifin (2015), the instruments of rice price

stabilization should be integrated and measurable covering

production performance, rice procurement, government

purchase price reference (Harga Pembelian Pemerintah/

HPP), stock management, rice price subsidy for poor

families, and market operations. One important question is

whether the strategies undertaken to stabilize the price of rice

or food in the price formation process are left to the market

mechanism or whether there should be intervention from the

government.

Countries with low per capita incomes still require

government interventions towards food security that can

reduce the threat of hunger and food insecurity (Timmer,

2004). Food security is one of the most strategic issues in the

development of a country, especially for developing

countries like Indonesia with large populations. The high

price level and volatility of rice prices pose a serious threat to

the people's access to food, especially for the poor and near-

poor, which are still very large in Indonesia. In addition, the

high level of food prices greatly contributes to the high rate

of inflation, thus impacting the economy widely.

Based on the background, the purpose of this research is to

analyze the effectiveness of rice price stabilization policies

that have been implemented by the Indonesian government in

the period 2010 to 2015.

2. Methodology

The data used in this study were monthly time series data

from January 2010 to December 2015. Data were collected

from Indonesia’s Agency for Logistics Affairs (Bulog) and

Indonesia’s Ministry of Trade.

To analyze the effectiveness of the price stabilization policy

that has been done by the government, it done based on

Presidential Decree No.5/2015 which regulates the price

stabilization policy conducted by the government, and refers

to the research of the Ministry of Trade (2015). This research

used multiple regression analysis model (Widarjono, 2007)

with hypothesis stats:

H nul : statistically independent variables (rice HPP,

market operations, rice imports) do not

significantly affect the dependent variable

(consumer rice price).

H alternatif : statistically independent variables (rice HPP,

market operations, rice imports) significantly

Paper ID: ART20177128 DOI: 10.21275/ART20177128 1060