Simulation of Government Policy Impact on Food Security and Poverty in Aceh

Abstract

Insufficient food availability causes most of food need in Indonesia fulfilled by import. This study aims to analyze the influence of government policy on food security and poverty in Aceh. It uses panel data of 21 regencies in 2007 to 2016 which were selected based on agricultural sector. Data were analyzed using 2 SLS method.  Historical simulations are used to simulate food security in Aceh. The analysis showed that a single policy alone, for example to increase government spending, would not effective to increase food security and reduce poverty in Aceh. Combination of policies in increasing government spending on food crops sub-sector, followed by stabilization on food price is the most effective way to improve food security and reduce poverty. To increase farmer’s capital assistance, especially for poor farmers, government may bear some of the cost of production to produce food by providing working capital assistance in the form of a special program financing.