The Impact of Rice Tariffication Law on Rice Farmer Income and Occupational Choice: A Microsimulation Approach

Purpose: This study was conducted to provide an ex-ante analysis of the impact of the Rice Tariffication Law (RTL) on rice farmers' income and occupation preferences. The study aims to determine how much increased in terms of total income before and after the implementation of RTL. Moreover the research aims to determine if how many farmers will shift to any industry after the implementation of RTL. Methodology: Using microsimulation modeling and logistic regression a microdata from the 2018 Family Income and Expenditure Survey (FIES) were used to simulate changes in total income and household-level expenditures. Findings: It was found that households whose heads were involved in agricultural activities and had more years of education had the highest income in the 2018 FIES. In the microsimulation model, it was observed that the implementation of the Rice Tariffication Law resulted in a noteworthy 52% increase in the total income of rice farmers who were recipients of the law, while non-recipients experienced a negative 19% change in their income. Moreover, an estimated 3,000 non-rice farmers transitioned to rice farming as income increased in rice farming activities. Unique Contribution to Theory, Practice and Policy: This study recommends the effective allocation and implementation of the Rice Competitiveness Enhancement Fund (RCEF) to benefit rice farmer recipients and promote inclusive growth for our farmers. Government institutions should promote microfinancing and strengthen cooperative systems to aid in the allocation of cash disbursement. The establishment of community-based offices focusing on the RCEF program will ensure that the program is accessible to farmers. Additionally, RCEF credit assistance should be considered for future study to assess the government's efficiency in implementing the program and whether the allocated fund is sufficient for all rice farmers in the country.