THE IMPACT OF FOOD PRICING POLICY TO THE REAL PRODUCER PRICE: A PARTIAL ADJUSTMENT MODEL FOR INDONESIAN UNMILLED RICE (GABAH)

Masun, S.Pt., Professor Koji Kotani

2011 | Tesis | S2 Magister Ek.Pembangunan

-

Floor price policy adopted in Indonesia has been believed to be effective to stabilize as well as to protect the domestic price of milled rice (beras) over to the world price, but its impact on the formation and the stabilization of producer price for unmilled rice (gabah) has not scientifically been evaluated. This study aims to examine this issue for the period of 1969-2008 by applying the partial adjustment model of time series analysis to identify the price transmission and its indices as well as to figure out the price stability. The result shows that floor price affects the formation of producer price in long term, but it does not in short term. Furthermore, it is found that the annual increment rate of floor price has been lower than the inflation rate, of which the increment rate transmitted into producer price in a single period (year) is fully exhausted by inflation. Given this identification, we claim that the floor price should be set higher than the current practice in order to be more effective, and to further stabilize the producer price in both short and long term due to highly fluctuating around its mean.

Kata Kunci : floor price, unmilled rice, price transmission, price stability, increment rate.