Do Poor Paddy Farmers Benefit from Increasing Rice Prices?

Yogi Makbul (Regional and Urban Planning Department, Institut Teknologi Bandung, Indonesia)
Nandan Limakrisna (Universitas Persada Nusantara YAI, Indonesia)
Sudrajati Ratnaningtyas (Entrepreneur Department, Institut Teknologi Bandung, Indonesia)
Aryo Cokrowitianto

International Journal of Supply Chain Management
Vol 10, No 2 (2021): International Journal of Supply Chain Management (IJSCM)

A policy of high rice prices can increase paddy farm incomes but also cause a rise in rice expenditures for farm households. Such a policy is needed to stimulate production but can harm rice consumers, especially poor families. We surveyed 284 paddy farmers in Gantar Sub-District, Indramayu Regency, Indonesia to analyze the impact of increasing rice prices on farmers’ net incomes, including poor paddy farmers. We found that a price increase benefits farmer if the price transmission elasticity is more than 0.2 for non-poor paddy farmers or 0.6 for poor paddy farmers. A high rice price policy can benefit paddy farmers if there is good price transmission in the market. Good transmission requires a strong rice market efficiency channel.