Food Policy and Poverty in Indonesia: A General Equilibrium Analysis

    Research output: Contribution to journalArticle

    Abstract

    Rice is Indonesia's staple food and accounts for large shares of both consumers' budgets and total employment. Until recently, Indonesia was the world's largest importer, but rice import policy is now highly protectionist. Since early 2004, rice imports have been officially banned. Advocates of this policy say it reduces poverty by assisting poor farmers. Opponents say it increases poverty, stressing negative effects on poor consumers. This paper uses a general equilibrium model of the Indonesian economy to analyse the effects of a ban on rice imports. The analysis recognises 1000 individual households, including all major socioeconomic categories, disaggregated by expenditures per person. It takes account of effects on each household's real expenditure and its income, operating through wages and returns to land and capital. The results indicate that the rice import ban raises the domestic price of rice relative to the import price by an amount equivalent to a 125 per cent tariff, six times the pre-2004 tariff. Poverty incidence rises by a little under 1 per cent of the population and increases in both rural and urban areas. Among farmers, only the richest gain. These results are qualitatively robust to variations in key parametric assumptions.
    Original languageEnglish
    Pages (from-to)429-451
    JournalAustralian Journal of Agricultural and Resource Economics
    Volume49
    Issue number4
    DOIs
    Publication statusPublished - 2005

    Fingerprint Dive into the research topics of 'Food Policy and Poverty in Indonesia: A General Equilibrium Analysis'. Together they form a unique fingerprint.

    Cite this