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Food Security in Indonesia: Current Challenges and the Long-Run Outlook

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  • Peter Timmer

    ()

Abstract

In the long run-- over the past four decades--improvements in food security in Indonesia have generally been driven by pro-poor economic growth and a successful Green Revolution, led by high-yielding rice varieties, massive investments in rural infrastructure, including irrigation, and ready availability of fertilizer. In the short run, food security in the country has been intimately connected to rice prices. After more than two decades of stabilizing domestic rice prices around the long-run trend of prices in the world market, Indonesia emerged from the devastating financial crisis in 1998 with domestic rice prices much higher than world prices and much higher than long-run trends of real prices in rupiahs. Although the current political rhetoric pushing for even higher prices uses food security as the rationale (i.e., they will cause greater self-sufficiency in rice), in fact few productivity gains are now available to rice farmers, so their gains will be consumers’ loses. High rice prices have a major impact on the number of individuals living below the poverty line and on the quality of their diet. The paper reviews research on the impact of rice prices on the poor, on real wages in rural and urban areas, and on the broader macroeconomic consequences for investments in labor-intensive manufacturing. Discussion then focuses on how political and economic circumstances have changed since price stabilization, implemented by the national food agency (Bulog), balanced the needs of producers and consumers as Indonesia’s approach to food security. The most important current challenge for the country’s future food security is re-starting rapid, pro-poor growth. An additional challenge on the horizon is the “supermarket revolution,” which is rapidly changing the basic structure of Indonesia’s food marketing system. Within a decade well over half of Indonesia’s rice is likely to be sold in supermarkets, thus transferring to the private sector a supply-management role that had historically been a public sector activity.

Suggested Citation

  • Peter Timmer, 2004. "Food Security in Indonesia: Current Challenges and the Long-Run Outlook," Working Papers 48, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:48
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    File URL: http://www.cgdev.org/content/publications/detail/2740
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    Cited by:

    1. Afkar, Rythia, 2015. "Joint Evaluation of Cash and In-kind Transfer programs in Indonesia: What are the roles in Food and Nutrition Security?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205395, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Afkar, Rythia & Matz, Julia, 2015. "Cash transfer, In-Kind, or both? Assessing the Food and Nutrition Security Impacts of Social Protection Programs in Indonesia," 2015 Conference, August 9-14, 2015, Milan, Italy 210936, International Association of Agricultural Economists.

    More about this item

    Keywords

    food security; Indonesia; agriculture; rice; poverty;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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