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Fertilizer Subsidies and Food Self-Sufficiency in Indonesia

Author

Listed:
  • Peter Warr
  • Arief Anshory Yusuf

Abstract

Indonesia is a net importer of almost all of its staple foods. National selfsufficiency in food, especially the main staple, rice, is a core objective of economic policy. Poverty reduction is also a core policy objective. Since the 1970s, Indonesia has used agricultural input subsidies, especially on fertilizer, to stimulate agricultural production, largely in pursuit of its selfsufficiency goals. Recently, it has also used output protection, especially in rice, for the same purpose. This paper utilizes a multi-sectoral, multihousehold general equilibrium model of the Indonesian economy to study the trade-offs between the goals of self-sufficiency and poverty reduction when two alternative means are used to achieve them: a fertilizer subsidy, on the one hand, and output protection, on the other. It does this by analyzing the aggregate and distributional effects of these two sets of policies and by comparing their effects with non-intervention. The analysis shows that, in terms of its effects on poverty, a fertilizer subsidy can be a more effective instrument for achieving the goal of rice self-sufficiency than final product import restrictions.

Suggested Citation

  • Peter Warr & Arief Anshory Yusuf, 2013. "Fertilizer Subsidies and Food Self-Sufficiency in Indonesia," Departmental Working Papers 2013-08, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2013-08
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2013/wp_econ_2013_08.pdf
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    References listed on IDEAS

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    1. Peter Warr, 2008. "World food prices and poverty incidence in a food exporting country: a multihousehold general equilibrium analysis for Thailand," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 525-537, November.
    2. Shahidur Rashid & Paul A. Dorosh & Mehrab Malek & Solomon Lemma, 2013. "Modern input promotion in sub-Saharan Africa: insights from Asian green revolution," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 705-721, November.
    3. Arief Anshory Yusuf, 2006. "Constructing Indonesian Social Accounting Matrix for Distributional Analysis in the CGE Modelling Framework," Working Papers in Economics and Development Studies (WoPEDS) 200604, Department of Economics, Padjadjaran University, revised Nov 2006.
    4. Warr, Peter G., 2005. "Food policy and poverty in Indonesia: a general equilibrium analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(4), December.
    5. Iwan J. Azis, 2000. "Simulating economy-wide models to capture the transition from financial crisis to social crisis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(2), pages 251-278.
    6. François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," Working Papers DT/2003/10, DIAL (Développement, Institutions et Mondialisation).
    7. Warr, Peter G., 2005. "Food Policy And Poverty: A General Equilibrium Analysis For Indonesia," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 139296, Australian Agricultural and Resource Economics Society.
    8. Osorio, Camilo Gomez & Abriningrum, Dwi Endah & Armas, Enrique Blanco & Firdaus, Muhammad, 2011. "Who is benefiting from fertilizer subsidies in Indonesia ?," Policy Research Working Paper Series 5758, The World Bank.
    9. Peter Warr & Arief Anshory Yusuf, 2014. "World food prices and poverty in Indonesia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(1), pages 1-21, January.
    10. George Fane & Peter Warr, 2008. "Agricultural Protection In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(1), pages 133-150.
    11. Peter Warr, 2011. "Food Security vs. Food Self-Sufficiency: The Indonesian Case," Departmental Working Papers 2011-04, The Australian National University, Arndt-Corden Department of Economics.
    12. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
    13. Robilliard, Anne-Sophie & Robinson, Sherman, 2005. "The social impact of a WTO agreement in Indonesia," Policy Research Working Paper Series 3747, The World Bank.
    14. repec:dau:papers:123456789/5130 is not listed on IDEAS
    15. T.S. Jayne & Shahidur Rashid, 2013. "Input subsidy programs in sub-Saharan Africa: a synthesis of recent evidence," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 547-562, November.
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    Cited by:

    1. Nguyen, Huy, 2014. "Crop diversification, economic performance and household’s behaviours Evidence from Vietnam," MPRA Paper 59090, University Library of Munich, Germany.

    More about this item

    Keywords

    Indonesia; fertilizer subsidies; food self-sufficiency; general equilibrium modeling.;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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