Resource, environmental, and economic determinants of food production

Purpose. This study aims to estimate the effects of arable land, fertiliser consumption, fossil and renewable energy use, credit, and temperature, as well as the moderating roles of exchange rates, consumer price inflation, and global fertiliser and energy prices on the impact of fertiliser and fossil energy consumption, regarding food production in Indonesia. Methodology. The analysis in this study employs the autoregressive distributed lag model for annual data spanning 1971 to 2022. The involvement of exchange rates, consumer price inflation, and global fertiliser and energy prices as moderating variable is based on premise that these factors can potentially attenuate or offset the positive impact of fertiliser and fossil energy consumption on food production. Results. The study revealed that food production was positively influenced by agricultural land, fertiliser consumption, and credit in the long run. Meanwhile, the exchange rate, inflation, global fertiliser and oil prices, and temperature changes negatively affected production. Empirical findings were obtained regarding the positive effect of fertiliser consumption and the negative impact of the exchange rate and inflation on food production. In addition, moderation by the exchange rate, inflation, and international fertiliser prices eliminated the positive effect of fertiliser consumption. Meanwhile, moderation in the exchange rate, inflation, and global energy prices enhanced the positive contribution of energy consumption to food production. Finally, there is evidence that credit and temperature changes reduce food production in the short run. Originality. This study develops an autoregressive distributed lag model that includes exchange rates, consumer price inflation, and global fertiliser and energy prices as moderating variables, yielding new findings that advance previous studies. The explanatory and control variables comprise a comprehensive set of predictors of long-run food production, encompassing agricultural, energy, economic, external, and environmental aspects. Practical implications. The government needs to increase the availability of arable land to support food production by optimising existing land and developing irrigation infrastructure and reservoirs. Furthermore, it should enhance land use and crop productivity through the optimisation of quality fertiliser consumption and the expansion of fertiliser subsidies. Additionally, policymakers need to control the use of fossil fuels while developing and using renewable energy in agricultural production to support sustainable food security. Stabilising inflation also has a positive impact on food production through enhancing the purchasing power for agricultural inputs and production efficiency. The development and utilisation of renewable energy and green technology can help mitigate climate change and minimise its adverse impacts on agricultural production.