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Long-term Impacts of Global Food Crisis on Production Decisions: Evidence from Farm Investments in Indonesia

Author

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  • Nose, Manabu
  • Yamauchi, Futoshi

Abstract

Did the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, we examine whether the 2007-08 food price crisis triggered farm investments. Empirical results show that (i) the food price crisis created a forward-looking incentive to invest, which can increase farm productivity in the long run, (ii) the expectation formation plays an important role in determining the impact, and (iii) the impact differs by the initial wealth; the positive price shock relaxed liquidity constraints among the poor. Implications on inequalities in income and productivity are discussed.

Suggested Citation

  • Nose, Manabu & Yamauchi, Futoshi, 2013. "Long-term Impacts of Global Food Crisis on Production Decisions: Evidence from Farm Investments in Indonesia," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149673, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:149673
    DOI: 10.22004/ag.econ.149673
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    Cited by:

    1. Mai, Nhat Chi, 2013. "Essays on Farm Household Decision-Making: Evidence from Vietnam," OSF Preprints 96azx, Center for Open Science.
    2. Agie Wandala Putra & Jatna Supriatna & Raldi Hendro Koestoer & Tri Edhi Budhi Soesilo, 2021. "Differences in Local Rice Price Volatility, Climate, and Macroeconomic Determinants in the Indonesian Market," Sustainability, MDPI, vol. 13(8), pages 1-21, April.
    3. Miyazaki, Suguru & Shimamura, Yasuharu, 2014. "Risk, Infrastructure, and Rural Market Integration: Implications of Infrastructure Provision for Food Markets and Household Consumption in Rural Indonesia," Working Papers 81, JICA Research Institute.

    More about this item

    Keywords

    Community/Rural/Urban Development; Risk and Uncertainty;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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