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Research Paper | Economics | Indonesia | Volume 8 Issue 10, October 2019

The Impact of Rice Field Size and Rice Price on Farmers Welfare in Indonesia

Made Kembar Sri Budhi | I Nyoman Mahaendra Yasa

Abstract: Rice is a basic need of people in Indonesia. The rapid development of tourism and industry resulted in the conversion of agricultural land, even though land is the main requirement for farming. Indonesia's rice policy has so far been less pro-farmer, because the government has always prioritized that rice stocks and prices are affordable for the community as consumers of rice. Whereas Indonesia is also an agrarian country, where the number of residents involved in agricultural activities is very large, although the contribution of the agricultural sector is not very significant. Therefore, it is important to conduct a study on the welfare of farmers, in this case in Farmers Term of Trade of Food Crops (FTT-FC) to be used as study material in realizing agricultural sustainability and national food security. The purpose of this study was to find out the impact of rice fields size and rice prices on the FTT of food crop (as a proxy of paddy farmers welfare) in Indonesia. This study uses panel data in all provinces in Indonesia over a period of five years. Data were analyzed with multiple regression techniques with eviews application. The results showed that the area of paddy fields had a positive but not significant effect on the FTT of food crop. But on the contrary the price of rice turned out to have a negative and significant effect on the FTT of food crop in Indonesia. This shows that the retail price of rice does not directly affect the welfare of farmers, so it is necessary to do further research on the supply chain of off-farm products (dry grain harvest) on the welfare of farmers.

Keywords: agricultural policy, Farmers Terms of Trade-Food Crop FTT-FC, rice price, size of rice field

Edition: Volume 8 Issue 10, October 2019,

Pages: 1793 - 1798

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