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Rice Prices And Poverty In Indonesia

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  • Neil McCulloch

Abstract

One of the reasons often given for government policies that promote higher rice prices is the desire to protect farmers and to reduce poverty, particularly in rural areas. The underlying assumption is that farmers benefit from higher rice prices and that helping farmers will reduce poverty since the majority of the rural poor are connected in some way with agriculture. This paper examines the evidence underlying this assumption. I show that only around a quarter of all households plant rice. A large majority of the population, including in rural areas, consume more rice than they produce and most are therefore harmed by higher rice prices. Those that gain from higher prices tend to be farmers with access to slightly larger plots of land. Thus an increase in the rice price constitutes a transfer from the large majority of consumers to a minority of producers at all income levels.

Suggested Citation

  • Neil McCulloch, 2008. "Rice Prices And Poverty In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(1), pages 45-64.
  • Handle: RePEc:taf:bindes:v:44:y:2008:i:1:p:45-64 DOI: 10.1080/00074910802001579
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    References listed on IDEAS

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    1. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, pages 915-923.
    2. Ross Mcleod, 2005. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(2), pages 133-157.
    3. Lisa Cameron, 1999. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(1), pages 3-41.
    4. Mudrajad Kuncoro & Tri Widodo & Ross McLeod, 2009. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, pages 151-176.
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    Cited by:

    1. Kirchberger, Martina, 2017. "Natural disasters and labor markets," Journal of Development Economics, Elsevier, pages 40-58.
    2. Joko Mariyono, 2009. "Technological and Institutional Changes in the Indonesian Rice Sector: From Intensification to Sustainable Revitalization," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 6(2), pages 125-144, December.
    3. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
    4. Patrice Ollivaud, 2017. "Improving the allocation and efficiency of public spending in Indonesia," OECD Economics Department Working Papers 1381, OECD Publishing.
    5. Permani Risti, 2011. "The Impacts of Trade Liberalisation and Technological Change on GDP Growth in Indonesia: A Meta Regression Analysis," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-30, December.
    6. Martina Kirchberger, 2014. "Natural Disasters and Labour Markets," Economics Series Working Papers WPS/2014-19, University of Oxford, Department of Economics.
    7. Bazzi, Samuel & Sumarto, Sudarno & Suryahadi, Asep, 2013. "It's All in the Timing:Household Expenditure and Labor Supply Responses to Unconditional Cash Transfers," MPRA Paper 57892, University Library of Munich, Germany, revised 31 Nov 2013.
    8. Raul Caruso & Ilaria Petrarca & Roberto Ricciuti, 2014. "Climate Change, Rice Crops and Violence. Evidence from Indonesia," CESifo Working Paper Series 4665, CESifo Group Munich.
    9. David Dawe, 2014. "Transmission of global food prices, supply response and impacts on the poor," Chapters,in: Handbook on Food, chapter 5, pages 100-121 Edward Elgar Publishing.
    10. Dawe, David & Maltsoglou, Irini, 2014. "Marketing margins and the welfare analysis of food price shocks," Food Policy, Elsevier, vol. 46(C), pages 50-55.
    11. Girik Allo, Albertus & Sukartini, Ni Made & Widodo, Tri, 2017. "Dynamic Changes in Comparative Advantage of Indonesian Agricultural Products," MPRA Paper 80028, University Library of Munich, Germany.
    12. Samuel Bazzi & Matthew Gudgeon, "undated". "Local Government Proliferation, Diversity, and Conflict," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-271, Boston University - Department of Economics.
    13. Samuel Bazzi, 2017. "Wealth Heterogeneity and the Income Elasticity of Migration," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 219-255, April.

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