Does Indonesia Need to Import Rice?

Abstract

The issue of economic growth in Indonesia has become more urgent. Indonesian government always attempts to maintain a reasonably low price for rice to guarantee that all segments of society have access to their primary staple food. The rice import policy has been debated. This study investigates whether or not the current Indonesian rice sector needs to import rice. For that purpose, we investigate the producers, consumers, middlemen, and the influence of rice import policy towards price stabilization at the consumer level. This study uses primary and secondary data. Primary data comes from observation and survey activities. The areas of study belong to West Java, Central Java, Special Region of Yogyakarta, and East Java Province. Secondary data is sourced from the Ministry of Trade, Statistics Indonesia, and FAO, as well as from the official websites of several related agencies. The results indicate that Indonesia does not need to import rice based on the investigation of farmers, traders, and consumers. However, the results of the Vector Error Correction Model show that the rice import policy affects stabilization prices at the consumer level. Rice imports can reduce the retail and wholesale prices of rice.