Differences in Local Rice Price Volatility, Climate, and Macroeconomic Determinants in the Indonesian Market

Rice is a staple food in most Asian countries, and food security is often viewed as having a rice supply to avoid a food crisis. The large number of people who have low incomes means there is a risk of household economic conditions being threatened when food prices are not controlled. We present a different approach by measuring rice price volatility at the local market level with climate and macroeconomic variables. The model succeeds in representing the variables that affect rice prices by an average of 75% nationally. The influence of macroeconomic variables and climate dynamics was found to have a non-uniform pattern from one region to another. The factors that dominate the volatility of rice prices in each province were different. To help address these problems, it is suggested to model and integrate climate data and macroeconomic variables. The output can be used to determine national policies for controllable factors and anticipate climate dynamics to reduce the risk that communities will have difficulty accessing food.