This paper describes the impacts of rice price fluctuations and price shocks due to crises on domestic households in Indonesia. In the long term the country was able to reduce poverty and undernourishment, because of its steady and strong economic growth.
A typical household spends nearly half of its total food intake on rice. Therefore, high rice prices make especially the poor vulnerable to price increases. In order to estimate how and to which extend rice price volatility affects demand, the daily calorie intake is focused with regard to a price increase of 10 % and 30 %.
Based on the assumption that people are food insecure a total calorie intake of 2,100 calories/day/person is taken into account as poverty line. Usually households consume less rice if the price is on a higher level. In Indonesia richer households have a more price-elastic demand if rice prices increases than poor households. On the contrary, those who are net consumers or producers of rice as well as governmental supported poor households have a relatively price-inelastic demand for rice.
This fact is different for households which differ in income level and location. This paper comes up with the conclusion that for rich urban households rice is a Giffen good and that they consume more of it when prices are high while the consumption of poorer rural households suffers. The same procedure applies for rural households.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The State of World Rice Market
- Global trade and Indonesia's position in it
- Rice price volatility and trade effects
- Indonesia's rice prices and policy efforts for stabilization
- Food Security in Indonesia
- Economic growth and poverty
- Rice production and consumption
- Impact of rice price increase on calorie intake
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This working paper examines the impact of volatile rice prices on Indonesia's domestic market, considering the country's food security, economic growth, and poverty reduction efforts.
- The role of global rice trade and Indonesia's position within it
- The effects of rice price volatility on trade and Indonesian markets
- Indonesia's policies aimed at stabilizing rice prices
- The relationship between rice prices, food security, and economic development in Indonesia
- The impact of rice price increases on calorie intake and food insecurity
Zusammenfassung der Kapitel (Chapter Summaries)
The introduction sets the stage for the analysis by outlining the research question and its relevance in the context of Indonesia's economic development and food security.
The second chapter explores the global rice market, focusing on Indonesia's position within it, examining trends in trade and price volatility, and analyzing the impact of these trends on Indonesian markets. The chapter also discusses policy efforts undertaken to stabilize rice prices.
Chapter three delves into Indonesia's food security situation, exploring the relationship between economic growth, poverty, and rice production and consumption. The chapter analyzes the impact of rice price increases on calorie intake and food security outcomes.
Schlüsselwörter (Keywords)
The key themes and concepts explored in this working paper include rice prices, volatility, food security, economic development, poverty reduction, global trade, Indonesia, market stabilization, policy interventions, calorie intake, and food insecurity.
Frequently Asked Questions
How do rice price fluctuations affect Indonesian households?
A typical household spends nearly half of its food budget on rice, making the poor extremely vulnerable to price increases and potential undernourishment.
Is rice considered a Giffen good in Indonesia?
The paper concludes that for rich urban households, rice acts as a Giffen good, meaning they consume more of it when prices are high.
What is the poverty line used for calorie intake in this study?
A total daily intake of 2,100 calories per person is considered the poverty line for assessing food security.
Which households have price-inelastic demand for rice?
Net consumers, net producers, and government-supported poor households tend to have a relatively price-inelastic demand for rice.
What policy efforts has Indonesia made regarding rice?
The country has implemented various policy efforts aimed at stabilizing rice prices to ensure food security and poverty reduction.
- Quote paper
- Kordula Pfeiffer (Author), 2013, Volatile Rice Prices, Munich, GRIN Verlag, https://www.grin.com/document/265293
