The World’s Largest Open Access Agricultural & Applied Economics Digital Library

This document is discoverable and free to researchers across the

globe due to the work of AgEcon Search.

Help ensure our sustainability.

Give to AgEcon Search

AgEcon Search
http://ageconsearch.umn.edu
aesearch@umn.edu

Papers downloaded from AgEcon Search may be used for non-commercial purposes and personal study only.
No other use, including posting to another Internet site, is permitted without permission from the copyright
owner (not AgEcon Search), or as allowed under the provisions of Fair Use, U.S. Copyright Act, Title 17 U.S.C.
qI I Agricultural Economics Report No. 202 July 1985
,

ANALYSIS OF
DEMAND AND SUPPLY OF RICE
IN INDONESIA
Won W. Koo
Maman H. Karmana
an d'
Gordon W. Erlandson

ii

Department of Agricultural Economics

North Dakota Agricultural Experiment Station
North Dakota State University
Fargo, North Dakota 58105

; =i
 FOREWORD

The authors wish to acknowledge the contributions of the clerical

and professional staff of the Department of Agricultural Economics who

have participated in the preparation of this report. Special thanks is

due to Ms. Lori Cullen for typing the manuscript. Dr. David Cobia, Dr.
William Wilson, and Ms. Brenda Ekstrom have been especially helpful with
their comments and suggestions.
Financial support for this study came from the North Dakota
Agricultural Experiment Station.
 Table of Contents
Page

Historical Background and Statement of the Problems ........... 1

Objectives .
. . . . . . . . .. . . . .. . . . . . . . . .. . . . . . 5

Scope of Study . ............. ...... . .

......... 5

Economic Variables of the Demand and Supply of Rice ........... 6

Rice Consumption .................... . . . ... 6
Population ............ . .. . ..... . . . . . . .. 6
Rice Production ................... . . .. . . . . . 9
Prices of Rice, Maize, and Cassava . ................ . 12
Income . . . . . . . . . . . . . . . . . . . . .. . . . . . . .. .. . 13

Analytical Framework . ..... . . .... . ............ .. . . . . 15

Results ....... ........... ............ . . .16

Demand Analysis . . .. . .............. ......... 17
Supply Analysis ................... ...... . . . 18

Conclusions . ........... ...... . .. ..... . .. 22

Literature Cited .... . . . . ... .. . . . . . . . . ... ... 23

 List of Tables
Table Page
1. RAINFALL ON SELECTED REGIONS, INDONESIA, 1976 .......... 2

2. ANNUAL RICE PRODUCTION, IMPORTS AND CONSUMPTION IN INDONESIA,

1960-1979 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7

3. ESTIMATED AGE DISTRIBUTION OF INDONESIAN POPULATION IN 1981 . . . . 8

4. DISTRIBUTION OF INDONESIAN POPULATION AMONG ISLANDS, 1971-1977 . . 9

5. HARVESTED AREA, PRODUCTION AND YIELD PER HECTARE OF PADDY IN JAVA

AND MADURA, BY FIVE YEAR PERIODS, 1916-1940 . ...... ..... 10

6. HARVESTED AREA, PRODUCTION AND YIELD RATE OF WETLAND AND DRYLAND

PADDY, INDONESIA, 1968-1973 . .................. . 11

7. PRICES OF RICE, MAIZE, AND CASSAVA, INDONESIA, 1960-1979 ..... 12

8. FARM GATE AND RURAL MARKET PADDY PRICES, JAVA, 1970-1975

(Rupiah/Kilogram) ................... ..... 13

9. ANNUAL INCOME PER CAPITA, INDONESIA, 1960-1979 .......... 14

10. RICE CONSUMPTION, PRICE OF RICE, MAIZE, AND ADJUSTED MONEY INCOME
FOR INDONESIA, 1960-1979 .................... 17

11. INCOME ELASTICITY OF DEMAND FOR FOOD IN SELECTED COUNTRIES IN ASIA

AND THE FAR EAST ................... ..... 19

12. RICE PRODUCTION, DEFLATED PRICE OF PADDY, MAIZE AND CASSAVA, JAVA,
1966-1975 . .................. ......... . 20

13. COMPARISON OF FARMGATE AND RURAL MARKET PRICES FOR MAIZE AND
CASSAVA, 1970-1975 . .................. ..... 21

- ii -
 HIGHLIGHTS

Rice is a major staple food of the Indonesian people. It provides over

50 percent of the calories in the average diet and almost 50 percent of the
protein intake. It is also uniquely important in the Indonesian economy, with
an annual market value of almost Rp. 2,000 billions, or 3.2 billion U.S.
dollars. The demand for rice has increased due to sharp increases in
population and higher consumption per capita as rice has been priced
relatively cheaper than other carbohydrate foods. The result is that the
supply of rice has to be supplemented with large imports. Such imports
represent a significant outflow of foreign exchange.
A single equation least squares approach was used to analyze demand for
rice. The annual rice demanded in Indonesia is determined by its own price,
the price of other carbohydrate foods (mainly maize), and the time trend.
Income did not appear to be significant. The demand elasticity with respect
to its own price is -0.13. Cross elasticity with respect to the price of
maize is 0.30. The coefficient of income elasticity was not statistically
significant.
The rice supply function is expressed as a function of 'producer's
average paddy price for the current year, lagged average producer paddy price,
lagged average maize price, lagged average cassava price, and the time trend.
Supply elasticity of rice with respect to its lagged average paddy price is
0.58.
Both consumers and producers of rice respond to price changes.
Substitutability among food crops is determined by price as well as tastes and
preferences. The supply imbalance may be alleviated by long-run changes in
food consumption habits and improvements in the technology of production.

- iii -
 ANALYSIS OF DEMAND AND SUPPLY OF RICE IN INDONESIA

by

Won W. Koo, Maman H. Karmana, and Gordon W. Erlandson*

This study investigates the demand and price situation for rice in
Indonesia. It analyzes the impact of economic variables such as income,
population, and prices of other cereals on the quantity of rice demanded and
supplied and calculates relevant elasticity measures of demand and supply.
Indonesia is a large, diverse country, an archipelago of over 3,000
islands located between Asia and Australia and scattered for about 3,000 miles
east and west along the equator. A population of 140 million (1978) makes it
the fifth most highly populated nation and the sixth largest country in the
world. About three-fourths of the population is supported by agriculture, the
major earner of Indonesia's foreign exchange. Agriculture contributed about
30 percent to the domestic product account in 1978 (BPS, "Statistical,"
1980/81). Indonesia has the characteristic tropical climate. Temperature is
relatively stable throughout the year, with a range between 230 and 320 C. in
the lowlands and about 5.5" C. less in the interior highlands. Rainfall is
relatively high, amounting to more than 1,000 millimeters per year in most
regions. Rainfall may reach more than 3,000 millimeters a year in the "wet
region" and about 650 millimeters in the "dry region" (Table 1).
Agricultural land comprises about.8 percent of the geographical area's
200 million hectares, which are mostly mountainous. Food crops are produced
on about 6 percent of the total land area, and rice is the most important.
Rice-growing areas include Java, Madura, Bali, Lombok, parts of northern and
southern Sumatra, and southern Sulawesi. Wet-rice cultivation is predominant
on Java and Bali; the other islands grow dryland rice. Java and Madura
contain about one-tenth of the country's land, have the most fertile soil, and
are well suited for growing rice. More than two-thirds of Indonesia's
population live on these two islands.
Since Indonesia's independence, rice yield per hectare has increased
significantly, as has total production. The government, through BIMAS (Mass
Guidance) and INMAS (Mass Intensification) programs started in 1966, has
enormously improved rice production. These programs built up a nationwide
agricultural service system which provides farmers with guidance and
assistance in doubling their harvests through utilizing high-yield strains of
rice, heavy fertilization, application of pesticides, irrigation improvement,
and better cultivation (Roekasah and Penny 1976).

Historical Background and Statement of the Problems

Rice is a major staple food of the Indonesian people. It provides over

50 percent of the calories in the average diet and almost 50 percent of the

*Koo and Erlandson are Professors, Karmana is a former graduate

student, Department of Agricultural Economics, North Dakota State University.
 - 2-

TABLE 1. RAINFALL ON SELECTED REGIONS, INDONESIA, 1976

Rainfall
Region Days of Rainfall Millimeter

Sulawesi
1. Palu 104 593
2. Kendari 166 2.959

Kalimantan
3. Pontianak 167 2.483
4. Sintang 117 3.780

East Nusa Tenggara

5. Waingapu 66 658

West Nusa Tenggara

6. Sumbawa Besar 42 793

Bali
7. Tabanan 87 1.317
8. Karengasem 95 1.375

East Java
9. Mojokerto 71 1.202
10. Lumajang 80 1.265
11. Sumenep 79 1.164

Central Java
12. Tegal 71 1.434
13. Wonosobo 146 2.605
14. Salatiga 103 1.912

West Java
15. Bogor 183 3.624
16. Purwakarta 140 3.141
17. Indramayu 102 2.316

Sumatera
18. Blangbintang 113 1.401
19. Rengat 91 1.552
20. Padangpanjang 183 3.631

SOURCE: BPS, "Statistical," 1976.

 - 3-

protein intake (Mears 1978). It is also uniquely important in the Indonesian

economy, with an annual market value of almost Rp. 2,000 billions, or 3.2
billion U.S. dollars.

In Java, where rice cultivation is dominant, the average land area

cultivated by each farmer is less than one-half hectare. The "big farmer" who
owned more than 5 hectares in 1959 represented only 0.41 percent of the land
owners. The majority of Indonesian farmers, especially in Java, still live at
subsistence levels (Mubyarto and Fletcher 1966).
The farmers prefer to grow rice to other crops. However, since rice is
more sensitive to soil, irrigation, and weather conditions, risks are greater.
Poor harvests of rice not only affect the farmer, but also put a serious
strain on the country's food economy.
The food balance sheet of the Indonesian Central Bureau of Statistics
lists 10.9 million tons of gross rice consumed in 1968 and 17.6 million tons
in 1978. Per capita rice consumption has increased from 96.47 kilograms in
1968 to 123.35 kilograms in 1978. The success of BIMAS and INMAS programs
during the same period has increased domestic rice production rapidly, from
10.8 million tons in 1968 to 16.3 million tons in 1978. However, as Mears
(1978) argued, the increase in rice production is not rapid enough to keep
pace with the demand from a growing population and with increased per capita
consumption. The result is that the supply of rice has to be supplemented
with large imports to meet increased per-capita consumption (Mears 1976).
Rice imports have rapidly increased from an average of only one-half
million tons in 1968 to almost two million tons in 1977 (Mears 1978). Over 30
percent of the 8.2 million tons of rice crossing world borders in 1977/78 was
imported into Indonesia following a poor harvest in the country (Alderman and
Timmer 1980). Some rice needs have been fulfilled by foreign grants of grain
in relation to aid programs. Even so, the nation still has to allocate
one-half billion dollars for rice and wheat purchased overseas (Hanna 1976).
From the macroeconomic perspective that Alderman and Timmer (1980)
argued, it is clear that such a large import of rice represents a significant
outflow of foreign exchange. In addition, the domestic policy provides
subsidies for domestic production of rice--another potential fiscal drain.
The question is therefore asked: Why do Indonesian people consume so
much rice and why is the demand for rice increasing from year to year? Teken
and Kuntjoro (1978) argued that rice consumption is difficult to reduce for
the following reasons:
1. Rice consumption has few substitutes in some areas. In an area
where people consume maize, cassava, or other tuber foods as
secondary foods, they will change their diet to consuming more rice
as their incomes increase.

2. Family planning has been intensified to reduce the birth rate. In

addition, improved health service by the government has lowered the
death rate. The results of these programs remain to be seen.
 - 4-

3. One alternative is to let the price of rice increase as determined

by market forces, but the government thinks that this alternative
is difficult. First, demand for rice is very inelastic. Second,
rice is used as a wage good for some groups, such as civil
servants, military personnel, and estate and industrial laborers.
The 1976 SUSENAS (National Socio-economic Survey) reported that the
poorest 30 perent of the population, to which most of the small farmers
belong, spend 37 percent of their budget on rice. Any increase in the price
of rice means a greater proportional loss of real income of this group. Yet a
higher price is an important factor to stimulate higher production. The
conflict of interests certainly presents a hard choice to the Indonesian
government when developing a price policy for rice.
The first regime of the Indonesian government after independence tried
a curious assortment of simultaneous incentives, both on the production and
consumption sides. Sporadic encouragement to produce was given through
propaganda and subsidies to farmers. On the other hand, to protect the
consumer, the government with its locally purchased and expensively imported
rice distributed free rice rations to'civil servants and military personnel
and also sold "rice injection" to the public market to stabilize supply and
demand at a low controlled price. As a result, it did much more to inhibit
than to expand production, to encourage rather than to restrict consumption,
and to create rather than to suppress a black market (Hanna 1976).
The second regime of the Indonesian government placed top priority on
production of foodstuffs. The "two-faces" of the rice-price policy are still
being continued by setting a floor price to protect producers and a ceiling
price to protect consumers. BULOG1 in the first year (1969) of the Five-Year
Development Plan set a floor price of Rupiah (Rp.) 13.20 per kilogram of
husked rice (price at farm gate) which translated into Rp. 36. per kilogram of
milled rice and Rp. 47. per kilogram at the grocer level. The ceiling price
was set at Rp. 50 at the rice milling level (Mybyarto 1980).
Partadiredja proved for 1970-1971 that BULOG had been able to overcome
the problem of increased rice prices in urban areas. However, this
institution failed to prevent a decreased rice price during the harvest season
in rural areas (Mubyarto 1980).
Mubyarto (1965) argued that even if rice is a subsistence crop, farmers
respond to its price. A high price of rice in one year is followed by an
increase in production the next year. Conversely, a low price would be
followed by decreased production.
Lains (1978) concludes that rice farmers in Indonesia have not
responded to the changes in rice price in the short run nor in the long run.
This led Mubyarto (1980) to be suspicious of the government's price policy,
even though he has no doubt that BULOG has successfully stabilized the rice

1 Bureauof Logistics is a nondepartmental institution directly under

the control of the President. This institution has authority to purchase rice
and sugar, domestically produced or through imports, to maintain floor and
ceiling prices of those two commodities.
 -5-

price for the consumer. Mubyarto contends that the failure of this price
policy should be compensated for by other alternative policies, such as
irrigation and improved management, intensifying rural cooperatives,
accelerating marketing of farm products, and intensifying extension services,
which will stimulate rice farmers to increase production.

Objectives

The purpose of this paper is to analyze variables influencing the

demand and supply of rice and determine their overall effects on rice prices
in Indonesia during the 1960-1980 period.
The specific objectives are to
1. Describe trends of rice prices
2. Estimate the demand and supply functions of rice
3. Examine the pricing behavior of rice
Results of this study will provide a better understanding of the rice
situation in Indonesia.

Scope of Study
This study is geographically limited to the Republic of Indonesia.
Because some data required for this study are not available, analysis of some
factors does not include the entire period 1960-1980.
This report involves analysis of demand and supply for rice as well as
the trend of its prices at various market levels. Data on retail prices for
rice and other food substitutes, maize and cassava, are based on the average
retail prices in some cities in Java. For simplicity of analysis, this study
has implicitly assumed that the market is integrated in the whole area. Afif
and Timmer documented the extreme independence of prices between various
islands of Indonesia. The General Price Index of Jakarta has been used to
deflate all prices to eliminate inflation effects in the analysis.
Independent variables (the price of rice, maize, cassava, and income
per capita) were regressed with the annual rice consumption per capita to
estimate the demand function. For the supply function, the price of rice,
maize, and cassava in rural markets of Java and Madura were regressed with the
annual total supply of rice. The trend of rice prices is explained by using
producer and retail prices during the five years from 1976 to 1980, since
available data for this purpose are limited to this period. Price behavior
will be explained in the next part of this report.

Data for the study were collected from a number of secondary sources.
Most of the data for the analysis were obtained from various publications of
Indonesian Central Bureau of Statistics.
 -6-

Economic Variables of the Demand and Supply of Rice

Rice Consumption

Total annual rice consumption equals the initial stock of rice plus
milled production plus imports within the year, less the year-ending inventory
of rice. Annual rice consumption per capita equals total rice consumption
divided by mid-year population.
This study does not account for the amount of rice utilized for feed,
seed, manufacture, and waste because such data are not available. The
difference between rice consumption per capita in this study and that in the
Food Balance Sheet provided by the Indonesian Central Bureau of Statistics is
due to 2 percent waste.
Most rice consumed in Indonesia comes from domestic production.
However, the amount produced is less than the amount of rice demanded. As a
consequence, the Indonesian government imports rice from such countries as the
United States and Thailand.
Rice imports over the last 20 years equalled about 7 percent of the
total consumed, but imports vary from year to year. From 1960-1964 rice
imports were about a million tons a year. Rice imports dropped sharply in
1965 due to unstable political conditions and economic difficulties in the
country. Rice imports in the following years increased again to almost 2
million tons in 1979.
Domestic rice production increased from about 7 million tons in the
early 1960s to almost 9 million tons in the late 1970s. Per capita rice
consumption also increased, especially during the 1970s. "Gross" rice
consumption per capita was 117 kilograms in 1960, then declined to 99
kilograms in 1967, and increased again to reach 134 kilograms in 1979. Any
decline in rice consumption from 1960 to 1967 was due not to changes in taste
or food habits but to economic difficulties.

Population
Total population is an important factor in determining rice
consumption. Data in Table 2 indicate that population increased an average of
3.7 percent annually from 1960 to 1979. Total number of people is important
as well as age and geographical (rural/urban) distribution. Table 3 presents
the estimated population of Indonesia by age groups in 1981.
Age groups up to the age of 14 and 19 accounted for 39.6 and 50.8
percent of the population, respectively. The largest groups are between 0 and
14 years. The Indonesian population structure might be called a "young age
population." This composition probably will not change significantly in
future years to 2001.

The composition, size, and growth of the population suggest that two
major future problems will be unemployment and consumption. The young age
TABLE 2. ANNUAL RICE PRODUCTION, IMPORTS AND CONSUMPTION IN INDONESIA, 1960-1979

Area Rough Beginning Milled Total Total Mid-year Consumption

Year Harvested Yield Production Stock Production Imports Consumption Population Per Capita
1000 HA MT/HA 1000 MT 1000 MT 1000 MT 1000 MT 1000 MT Million KG/Year

1960 7,285 2.05 14,953 850 10,168 891 11,091 94.8 117
1961 6,857 2.06 14,096 818 9,585 1,064 10,666 96.4 111
1962 7,283 2.08 15,124 801 10,284 1,025 11,281 98.6 114
1963 6,731 2.00 13,468 829 9,158 1,043 10,167 100.8 101
1964 6,980 2.02 14,134 863 9,611 1,010 10,582 102.3 103
1965 7,328 2.06 15,063 902 10,243 203 10,498 104.3 101
1966 7,691 2.06 15,812 850 10,752 308 10,929 106.5 103
1967 7,516 2.04 15.297 981 10,402 354 10,806 108.8 99 -I
!

1968 8,021 2.14 17,156 931 11,666 628 11,854 111.2 107
1969 8,014 2.25 18,013 1,371 12,249 604 13,042 113.6 115
1970 8,135 2.38 19,324 1,182 13,140 956 13,763 116.2 118
1971 8,324 2.42 20,182 1,515 13,724 503 14,181 118.8 119
1972 7,898 2.45 19,387 1,561 13,183 748 14,334 121.6 118
1973 8,404 2.56 21,481 1,158 14,607 1,660 15,751 124.6 126
1974 8,537 2.63 22,463 1,674 15,276 1,070 16,373 127.6 128
1975 8,495 2.63 22,331 1,647 15,185 673 16,850 130.6 129
1976 8,369 2.78 23,301 655 15,845 1,293 16,977 133.7 127
1977 8,360 2.79 23,347 816 15,876 1,989 18,010 136.8 132
1978 8,929 2.89 25,772 671 17,525 1,845 18,714 140.0 134
1979 8,850 2.98 26,350 1,327 17,918 1,953 20,157 143.2 141
-------------- -·---------------- --- ------------------ -- --

SOURCE: USDA 1980; Mears 1976.

 -8-

TABLE 3. ESTIMATED AGE DISTRIBUTION OF INDONESIAN POPULATION IN 1981

Age Group Population Composition

Years Numbers Percent

0- 4 20,977,000 14.46
5- 9 18,457,600 12.73
10-14 17,951,900 12.38
15-19 16,240,700 11.20
20-24 13,714,200 9.46
25-29 11,453,200 7.46
30-34 8,1133,500 5.61
35-39 7,329,400 5.05
40-44 7,561,000 5.21
45-49 6,282,900 4.33
50-54 5,112,500 3.52
55-59 4,067,800 2.80
60-64 3,114,300 2.15
65-69 2,159,600 1.49
70 over 2,483,000 1.71

TOTAL 145,038,600 100.00

SOURCE: BPS, "Population," 1978.

groups are also known as "consumptive groups" in the sense that they consume a
large part of what they produce.
The figures above show that the demand for rice will increase from year
to year. First, the rate of rice consumption for the young age groups will
increase as they grow in years. Second, there is no indication of a shift in
food consumption from rice to substitutes.
Another population problem is that most of the people live on Java and
Madura island, which account for only one-tenth of the Indonesian land area.
The population distribution by islands is shown in Table 4.
Java is densely populated and was developed long before the other
islands. Existing government control, education, and economic institutions
give Java a relatively better infrastructure. Java is more attractive for
people to live on than other islands. This explains why transmigration, a
major Indonesian government program, faces difficulties. Hull et al., as cited
 -9 -

TABLE 4. DISTRIBUTION OF INDONESIAN POPULATION AMONG ISLANDS, 1971-1977

Year Java and Madura Outer Java Indonesia

---------------------- percentages-- --------------

1971 63.8 36.2 100

1972 63.6 36.4 100
1973 63.5 36.5 100
1974 63.3 36.7 100
1975 63.2 36.8 100
1976 63.1 36.9 100
1977 62.9 37.1 100

SOURCE: BPS, "Population," 1978.

by Mubyarto (1980), argued that even if family planning were successful, there
would be 215 million people in Java by the year 2000, and 17 million would
live in Jakarta, the capital city. There will be 96 million needing jobs.

Rice Production
Rice production in Indonesia is from two sources, wet and dry land
paddies. Water from irrigation or rainfall permits farmers to grow rice by
wet cultivation, which produces greater yields than dry land cultivation.
Irrigation permits farmers to plant rice twice, even three times a year. The
new high-yielding varieties (HYV) grow in a relatively short period of 110
days.
Irrigation developments and resultant increased rice production
occurred in Java and Bali long before the Dutch arrived. Before the farmers
knew about such modern inputs as HYV, fertilizers, and pesticides, soil
minerals required by rice plants to grow were provided in the irrigation
water. The water which temporarily stood in the rice field provided a good
media for certain algae to live and capture nitrogen from the air through a
fixation process. The nitrate element, as a product of this process, became
available to the rice plant. At that time the farmers only realized that rice
yields improved through irrigation. The only other factor needed to expand
rice production was more labor. This was the link between the expansion of
irrigation, wet land paddy cultivation, and the increase in population.
Geertz (1963) intensively studied this phenomena and concluded that
agricultural involution (a retrograde or degenerative change) had occurred
among Java's rice farmers. More detailed information and the negative
cultural impacts of the involution will not be explained in this paper. The
study by Geertz helps to explain why Java is so densely populated and why
irrigated and wet land rice fields are predominant on the island.

The Dutch colonialism in the mid 19th century started developing

irrigation on Java by building dams and primary canals. They provided
supplementary water needed by plantations owned by the private Dutch
 - 10 -

companies. One dam, on the average, irrigated 34,000 hectares of rice (Booth
1977). During this period farmers were not applying commerical fertilizer, so
rice yields per hectare were relatively constant, as shown in Table 5.

TABLE 5. HARVESTED AREA, PRODUCTION AND YIELD PER HECTARE OF PADDY IN JAVA
AND MADURA, BY FIVE YEAR PERIODS, 1916-1940

Year Production Harvested Area Yields

1000 quintals 1000 hectares qwt/ha

1916-1920 61,085 2,806 21.77

1921-1925 60,013 2,887 20.79
1926-1930 64,689 3,033 21.33
1931-1935 68,448 3,279 20.87
1936-1940 78,362 3,780 20.73

SOURCE: Booth 1977.

Increase in total rice production initially came from the increase in

cu-ltivated area and in the harvested area. Booth (1977) argued that rice
yields during those periods were relatively constant because they included
figures on the lower-yielding dryland paddy.
Rice yields per hectare from 1960 to 1967 did not greatly increase.
The rice intensification programs were started in 1965 and showed increased
yields in three years. Rice yield after 1968 increased every year from 2.14
tons to 2.98 tons per hectare in 1979. More figures on harvested area,
production, and yield per hectare from wetland and dryland paddy are presented
in Table 6.

Data from 1968 to 1973 indicate that about 60 percent of the harvested
area is in Java and 40 percent is in Outer-Java. Paddy production is about
64 percent of the total on Java and 36 percent on Outer-Java. The yields of
wetland paddies on Java are higher than in Outer-Java; Java's yield was 3.37
tons per hectare in 1968 and 3.89 tons per hectare in 1973. The difference in
yield between Java and Outer-Java is due to a higher level of technology,
better irrigation and infrastructure, and the abundance of labor in Java to
help intensification.
The harvested area of dryland paddy in Java is only 24.1 percent of the
total dryland harvested area, which is less than on Outer-Java. Even then,
yield per hectare of dryland paddy in Java is higher than in Outer-Java.

Harvested area of dryland paddy equals cultivated area because this

paddy land is planted only once a year during the rainy season. Harvested
area of dryland paddy on Java declined by 18.4 percent, from 407,000 hectares
in 1968 to 332,000 hectares in 1973. This indicates a conversion of dryland
for paddy into wetland or other purposes, such as for living area. A similar
decline happened in Outer-Java.
 -- Uni 1968
I---------
Item
196171
Unit 1968 1969 1970 1971 1972
7 I6
-1---
TABLE 6. HARVESTED AREA, PRODUCTION AND YIELD RATE OF WETLAND AND DRYLAND PADDY, INDONESIA, 1968-1973

Java
1973 Avg.
_
19168
7 0----------7
0177-- - g
1969 1970
Outer Java
1971 1972 1973 Avg.

Wetland Paddy
Harvested area hectare 3,857 3,947 3,959 4,050 4,006 4,235 2,506 2,596 2,720 2,843 2,596 2,828

Percent of Total 60.6 60.3 59.3 58.8 60.7 60.0 59.9 39.4 39.7 40.7 41.2 39.3 40.0 40.1

Production metric ton 13,013 13,925 14,647 15,675 15,056 16,471 7,060 7,549 8,502 8,633 8,345 9,431
I
Percent of Total 64.8 64.8 63.3 64.5 64.3 63.6 64.2 35.2 35.2 36.7 35.5 35.7 36.4 35.8

Yield ton/ha. 3.37 3.53 3.70 3.87 3.7& 3.89 2.82 2.91 3.13 2.94 3.21 3.33

Dryland Paddy
Harvested area hectare 407 347 343 366 326 332 1,250 1,123 1,113 1,066 970 1,108

Percent of Total 24.6 23.6 23.6 25.5 25.2 23.1 24.1 75.4 76.4 76.4 74.4 74.8 76.9 75.7

Production metric ton 590 506 519 554 532 576 1,764 1,576 1,602 1,531 1,418 1,613

Percent of Total 25.1 24.3 24.5 26.6 27.3 26.3 25.7 74.9 75.7 75.5 73.4 72.7 73.7 74.3

Yield ton/ha. 1.45 1.46 1.51 1.51 1.63 1.74 1.41 1.40 1.44 1.44 1.46 1.60

SOURCE: BPS, "Statistical" 1977/78.

 - 12 -

The difference in yield between wetland and dryland paddy is a major

reason why farmers have shifted to more wetland cultivation. The cropping
intensity of wetland could be increased, especially with irrigation
available.

Prices of Rice, Maize, and Cassava

Changes in the relative prices of rice and its close carbohydrate-food
substitutes influence the relative per capita consumption. Consumers shift
their consumption away from rice and help foster rice self-sufficiency when
the prices of maize and cassava are relatively cheaper than the price of rice.
A relatively lower price of rice shifts in the other direction so people will
consume more rice. Mears used price to explain relative changes in prices of
food substitutes and their trend. The prices of rice, maize, and cassava from
1960 to 1979 are presented in Table 7. The market prices reflect an increase
from year to year partly due to inflation. All prices in this study are

TABLE 7. PRICES OF RICE, MAIZE, AND CASSAVA, INDONESIA, 1960-1979

Current Price Relative Price to Rice

Year Rice Maize Cassava Maize Cassava
------Rp./Kilogram--------
1960 7.62 3.70 0.88 .49 .12
1961 12.63 6.05 1.90 .48 .15
1962 38.10 17.92 6.98 .47 .18
1963 76.28 39.80 11.20 .52 .15
1964 202.28 79.20 24.50 .39 .12
1965* 726.04 267.45 58.95 .37 .08
1966* 5.96 2.66 1.22 .45 .20
1967 16.64 7.26 2.84 .44 .17
1968 48.13 19.11 7.26 .40 .15
1969 38.26 20.17 6.28 .53 .16
1970 43.47 19.60 8.08 .45 .19
1971 39.80 20.44 7.58 .51 .19
1972 45.90 27.32 9.80 .60 .21
1973 71.34 35.62 16.85 .50 .24
1974 76.30 46.73 13.46 .62 .18
1975 97.10 59.91 17.55 .58 .17
1976 116.22 76.87 28.02 .66 .24
1977 115.53 77.92 29.15 .67 .25
1978 119.85 77.82 28.61 .64 .23
1979 133.30 103.92 33.34 .77 .25

*Since 1966 prices are in new Rupiah (1,000 old Rupiah = 1 new Rupiah).

SOURCE: Mears 1976; BPS "Statistical," 1977/78, 78/79, 79/80; BPS

"Indikator," 1975-1979.
 - 13 -

deflated by the cost of living index of Jakarta. Rice prices were based on
retail rice prices of a cheap quality of rice in Jakarta. Prices for maize
and cassava were based on their retail prices in rural markets in Java.
Prices of maize and cassava increased relative to rice after 1965.
Annual per capita consumption of maize from 1960 to 1965 was 26 kilograms.
From 1970 to 1975 it declined to an average of 20 kilograms. In a similar
way, annual consumption of cassava was 103 kilograms in the first period and
declined to 73 kilograms in the next period. Partially due to relative price
changes but also to the negative income elasticities involved, per-capita
consumptions of maize, cassava, and other carbohydrate foods have declined.
Mears (1976) concluded that there was a net substitution of rice for the other
carbohydrates. Also, the increase of maize and cassava production was slower
than that for rice, although large potential export markets exist for both
crops.
The difference of rice prices between "farm gate" and rural markets
from 1970 to 1975 is presented in Table 8. Differences between the two prices
have been widening, although the overall trend is very erratic. Years of
poor harvest, such as 1972, show a narrower differential between farm gate and
rural market prices than in such favorable years as 1971 and 1975. Booth
(1979) stated that the price differences between the farm gate and the rural
market are likely due to poor transportation. If so, it would reduce
competitiveness of the farmers; if not, middlemen would dominate the marketing
system.

TABLE 8. FARM GATE AND RURAL MARKET PADDY PRICES, JAVA, 1970-1975
(Rupiah/Kilogram)

West Java Central Java Yogyakarta East Java

Year Price Ratio Price Ratio Price Ratio Price Ratio
Rp. Rp. Rp. Rp.
1970 22.2 109 19.9 108 19.7 106 18.8 106
1971 18.9 119 15.4 134 18.1 114 15.7 121
1972 29.2 93 26.6 100 30.5 79 23.1 102
1973 35.7 115 32.0 123 34.8 97 31.1 117
1974 40.5 109 35.9 121 39.7 106 38.3 104
1975 44.9 113 44.1 120 45.0 114 40.5 126

Rural Market Prices

Note: Ratio = Farm Gate Prices X 100

SOURCE: Booth 1979.

Income

Income herein is based on data from the Indonesian Central Bureau of

Statistics. National income or net national product at factor cost is the
 - 14 -

value of gross national product (GNP) after subtracting net indirect taxes and
depreciation. Income per capita equals national income divided by population.
This analysis had all income or money income figures deflated by the cost of
living index of Jakarta to avoid the effects of inflation.

Use of GNP as a measurement of income has been criticized since GNP does
not reflect how the national income was distributed among the population.
Aware of these weaknesses, we assumed that the national income was equally
distributed. Annual money income and adjusted money income per capita figures
from 1960 to 1979 are presented in Table 9.

TABLE 9. ANNUAL INCOME PER CAPITA, INDONESIA, 1960-1979

Cost of Living Adjusted Change in Adjusted

Year Money Income Index-Jakarta Money Income Money Income
.--
--. Rp.-- Rp.----

1960 3,589 112 320 --

1961 4,254 101 421 +31.6
1962 12,212 356 343 -18.5
1963 289,444 652 436 +27.1
1964 62,195 1,757 354 -18.8
1965 206,731 9,950 208 -41.2
1966 2,687 76 354 +70.2
1967 6,916 206 336 - 5.1
1968 15,706 464 338 + 0.6
1969 20,880 545 383 +13.3
1970 24,811 612 405 + 5.7
1971 27,348 639 428 + 5.7
1972 31,841 680 468 + 9.3
1973 46,073 891 517 +10.5
1974 70,987 1,253 567 + 9.7
1975 82,280 1,492 551 - 2.8
1976 99,758 1,788 558 + 1.3
1977 118,793 1,985 598 + 7.2
1978 133,275- 1,146 621 + 3.8
1979 182,991 2,146 657 + 5.8

SOURCE: BPS, "Statistical," 1970, 1974, 1977/1978, 1980.

Money income rose from 1965 to 1966 because of devaluation. One

thousand of old-Rupiah were changed into one new-Rupiah. This was reflected
in the cost of living index. The rate of change in real income from 1960 to
1966 was very erratic. Real income steadily increased from 1967 to 1979
except for 1975.
 - 15 -

Analytical Framework

The original hypothesis of this study concerns factors influencing the

demand for rice in Indonesia. In general, demand for rice is determined by
the price of rice and related commodities; income; consumer's taste,
preferences, and expectations; and the size of the population.
Rice, maize, and cassava are three important foodstuffs for most
Indoneisan consumers, and the price of each commodity will affect the demand
of the others, directly or indirectly.
An increase in income of consumers results in an increase in the demand
for most products. For consumers at high income levels, an increase in income
may not increase rice consumption. For some whose diets shift from
carbohydrates to food with more protein, an increase in income may even
decrease their consumption of rice.
Food habits (taste and preferences) of consumers may not change in the
short-run period. In his study of consumption in Indonesia, Timmer (1971)
stated there was no evidence to suggest a substantial shift to other food
substitutes in the next few years. It was assumed that the shifts will be
gradual and be captured by the trend.
Expectations are not included in this study. It is assumed that there
will be no shift in demand due to a change in consumers' expectations or taste.
Since the market demand for rice is made up of the sum of individual
demand curves, the greater the number of individuals in the market, the
greater will be the market demand. Therefore, the size and growth of the
population are very important in shifting the demand for rice.
The hypothesis in this study is based upon the concept of pure
competition, which involves many small individual farmers and merchants
supplying rice. Lacking governmental price control in the market, the price
of rice is relatively free to move in response to changes in supply and
demand.
As an analytical model, multiple regression provides detailed analysis
concerning relationships between dependent and independent variables. The
single equation least squares approach was used to analyze demand and price of
rice. The general model of demand for rice is

Qdt = f (PrtPmtPctYt) (1)

where: Qd = quantity of rice demanded per capita, per year

Pp = retail price of rice per kilogram

Pm = retail price of maize per kilogram

Pc = retail price of cassava per kilogram

 - 16 -

Y - net annual income per capita

t = index for year

Quantity demanded and net income are calculated based on per capita
basis. Foote (1958) suggested that per capita data will avoid confusing
the time trend for population with one that might reflect other effects.
Linear and logarithmic equations are the principal functional forms
used in economic analyses (Foote 1958). An advantage of using logarithmic
equations is that it implies demand is accounted for in positive terms and
will be analyzed in the postive quadrant. This type of equation is also
convenient because it has the mechanical advantage of yielding curves that
have a constant elasticity, even if that is not a valid criterion for deciding
on their use. The multiplicative effects of independent variables on
dependent variables in this functional form will smoothen variability.
Foote (1958) stated that logarithmic equations should be used when (1)
the relationships between the variables are believed to be multiplicative
rather than additive, (2) the relations are believed to be more stable in
percentage than in absolute terms, and (3) the unexplained residuals are
believed to be more uniform over the range of independent variables when
expressed in percentage rather than absolute terms.
The supply function for rice is measured with respect to the price of
paddy (threshed unmilled rice, also the wet land in which rice is grown) and
prices of other competing food crops, maize and cassava. Other exogenous
variables could not be included in the model because the data were not
available.
The supply equation for rice was specified as follows:

Qst = g(Ppt-1 Pmt-1, Pct-1, et) (2)

where: Qst = annual paddy production

Ppt = producer paddy prices per kilogram

Pmt = rural maize prices per kilogram
Pct = rural cassava prices per kilogram
e = disturbance term

Results

Demand for and supply of rice are estimated by using time series data
for relevant variables from 1960 to 1980.
 - 17

Demand Analysis

The annual quantity of rice demanded in Indonesia is hypothesized to be

determined by its own price, the price of other carbohydrate foods (mainly
maize), and the time trend. The data used for the demand analysis are shown
in Table 10. A trend variable is included to capture changes in consumer's

TABLE 10. RICE CONSUMPTION, PRICE OF RICE, MAIZE, AND ADJUSTED MONEY INCOME
FOR INDONESIA, 1960-1979

Rice Consumption Price of Price of Adjusted

Year Per Capita Rice Maize Money Income
---- Kilogram--- -------- ------ deflated--------------

1960 117 7.17 3.48 320

1961 111 10.13 4.99 421
1962 114 11.28 5.31 343
1963 101 9.18 4.79 436
1964 103 11.33 4.44 354
1965 101 12.39 4.56 208
1966 103 7.84 3.50 354
1967 99 8.08 .3.52 336
1968 107 10.26 4.12 338
1969 115 7.02. 3.70 383
1970 118 7.10 .3.20 405
1971 119 6.23 3.20 428
1972 118 6.75 4.02 468
1973 126 8.01 4.00 517
1974 128 6.09 3.73 567
1975 129 6.50 4.02 551
1976 127 6.50 4.30 558
1977 132 5.82 3.93 598
1978 134 5.58 3.63 621
1979 141 4.79 3.73 657

taste and preference. An income variable is not included because the portion
of per capita income for rice consumption is relatively small. Based on the
preliminary results, the income variable is not significant. All price and
income variables are deflated by consumer price index. The estimated demand
models are as follows:

Qdt = 68.252 - 0.0 4 5 Prt + 3.276Pmt + 0.0494Yt + 1.329T

(13.99) (1.54) (4.16) (0.028) (0.49) (3)
R2
=0.885 DW = 1.662
 - 18 -

Qdt = 78.102 - 1 .8 54 Prt + 8.679Pmt + 1.884T

(13.597) (1.148) (2.918) (0.396) (4)
R2 = .8203 DW = 1.819

where numbers in parenthesis are standard errors associated with the

corresponding variables. All variables are previously defined.
Model 3 includes an income variable. As shown in equation (3)the
income variable is not significant at all and provides a multicollinearity
problem. Consequently, another model is specified without the income variable
(model 4). All variables in model 4 are significant (R2 is 0.83) indicating
that the model is well fitted with actual data.
Based on the above equation, demand elasticity with respect to its own
price is -0.13. This means that for each 10 percent increase in the price of
rice, the annual demand for rice would decrease by 270,000 tons, given an
annual consumption rate of 20 million tons.
The value of price elasticity of demand for rice from this study is
consistent with the results of other studies, which estimated the value of
demand elasticity between -0.1 and -0.3 (Mears 1976).
Cross elasticity with respect to the price of maize is 0.30. This
means that each 10 percent increase in the price of maize contributes to the
annual increase in demand for rice by approximately 600,000 tons.
The coefficient of income elasticity will not be discussed because the
significance of its coefficient is so low. Other studies have estimated
expenditure elasticity of food for Java to be 0.65 (Timmer 1971) and that of
Indonesia to be approximately 0.6.2 Mears (1976) explained that, as real
incomes rise, the income elasticity of demand for rice tends to decline. The
decline by 1985 could be as much as 0.2 from the two previous estimates.
Table 11 provides comparative income elasticities for food in other countries
in Asia and the Far East.
This study,' utilizing net income based on GNP, is in fact
over-estimating the real income. Todaro (1977) stated that the calculation of
the rate of GNP growth is in reality largely a calculation of the rate of
growth of the incomes of the upper 40 percent of the population who receive a
disproportionately large share of the national product. Therefore, GNP should
not be used as an index of improved welfare.

Supply Analysis

When estimating the supply function of rice or agricultural products in

general by using a single least squares equation, the assumption is made that

2 Thisresult is based on the previous study conducted by Suhady which

is cited by Mears in his paper "Indonesia's Food Problems, PELITA II/III,"
Economics and Finance in Indonesia, Vol. XXIV, No. 2, June 1976, p. 100.
 - 19 -

TABLE 11. INCOME ELASTICITY OF DEMAND FOR FOOD IN

SELECTED COUNTRIES IN ASIA AND THE FAR EAST

Country Income Elasticity

India .81
Ceylon .81
Japan .60
Philippines .76
Burma .79
China (mainland) .60

SOURCE: Mubyarto and Fletcher 1966.

all independent variables are predetermined and the quantity supplied within
the year is not affected by the current year's price (Todaro 1969).
Price of rice in the current year is included in the model because rice
is planted during the rainy season in almost the entire region starting in
October-November every year. If irrigation is available, the farmers can
plant rice twice or even three times a year. This means that several months
before the rainy season the farmers may.have some rice price information from
earlier marketings. Frequent marketings throughout the year improve the
information upon which planting decisions are made. Farmers who cultivate dry
land may adjust their decision of whether to plant rice or other crops, even
farmers whose decisions have been based upon the traditional pattern of
planting only rice without regard to price.
The rice supply equation is estimated by utilizing a ten-year time
series from 1966 to 1975. All price variables are deflated by consumer price
index. The data are shown in Table 12.
The rice supply function is expressed as a function of producer's
average paddy price for the current year, lagged average producer paddy price,
lagged average maize price, lagged average cassava price, and time trend.
The estimated rice supply function is as follows:

log Qs = 0.87 + 0.20 log Ppt + 0.58 log PPt-1 - 0.30 Pm, 1
(1.176) (2.32) (0.909)
- 0.25 log Pct-1 + 0.39 log T
(1.78) (7.8)

R2
=0098 DW = 1.93
 - 20 -

TABLE 12. RICE PRODUCTION, DEFLATED PRICE OF PADDY, MAIZE AND CASSAVA, JAVA,
1966-1975

Year Production Price of Paddy Price of Maize Price of Cassava

1000 kb. ------------------- Rupiah/Kilogram---- ------

1966 4.66 2.50 2.66 1.22

1967 5.12 7.28 7.26 2.84

1968 7.08 21.60 19.11 7.26

1969 7.50 16.32 20.17 6.28

1970 7.89 20.10 19.60 8.08

1971 8.43 18.10 20.44 7.58

1972 8.10 22.53 27.32 9.80

1973 8.87 33.56 35.62 16.85

1974 9.44 37.66 46.73 13.46

1975 9.43 45.10 59.91 17.55

SOURCE: BPS, "Indikator," 1970-78.

All of the coefficients of the above equation have the expected sign.
The value of R2 is 0.98. Numbers in parentheses represent the t-values of the
corresponding variable. However, the current producer paddy price (Ppt) and
lagged average maize price (Pmt-1) have a low t-value. The low significance of
farmers' response may be due to several reasons. First, the data for
producers' paddy prices are for the entire current year and may not reflect the
price before the rainy season when planting decisions are made. Second, most
of the rice farmers have a small area of land, and the failure of their crop is
of great consequence. To avoid risk, the farmers will not react to the current
price, but will adopt a wait-and-see attitude. Mubyarto (1980) stated that in
spite of the fact that rice is a subsistence crop for most of the farmers, the
farmers still respond to its price; the low price of rice in one year will be
followed by declining rice production the next year. With reference to this
statement, the result of this study also has shown the greater response of the
farmers to the lagged average producer paddy price.

Supply elasticity of rice with respect to its lagged average paddy price
is 0.58, which means that a 10 percent increase in paddy prices would result in
increased production of 928,000 tons based on paddy production in Java of about
16 million tons. The paddy price elasticity value from this study (0.58) is
higher than the elasticity value of the previous study by Mubyarto (1980) for
the period 1951-1962, which was 0.33 for wetland and 0.25 for dryland
 - 21 -

cultivation. This is understandable because the elasticity value from this

study includes data taken from the period when the rice intensification
program through BIMAS and INMAS was launched. Another reason is that the
conversion of rice fields from dryland to wetland, which occurred in the 1960s
and 1970s, also affected the increase in rice production. The results of this
study clearly indicate that farmers will respond with an increase in rice
production whenever its price is attractive to them and the opportunity is
favorable.
Time trend is highly significant as an independent variable. It
captures the effect of changes in technology or consistent government programs
to improve farm practices.
Supply cross elasticity with respect to maize has a low significance,
perhaps because maize is grown in mixed stands with other crops. Therefore
its price has little effect on rice production.
There is an indication that farmers will respond to a change in price
of cassava. This can be true especially for the farmers who own or cultivate
dry land, for they can choose to plant rice or cassava or both together
(intercropping). The problem is that the marketing infrastructure for both
maize and cassava is relatively poorer than it is for rice, especially
transportation and information. Besides, the risk of low rice prices during
harvest season may be prevented through the mechanism of a floor price system.
Unfortunately, this price mechanism is still unavailable for maize and
cassava. Comparison of farmgate and rural market prices for maize and cassava
is illustrated in Table 13. A comparison of the ratios in Table 13 with those
in Table 8 reveals that a smaller differential exists for rice than for maize
and cassava.

TABLE 13. COMPARISON OF FARMGATE AND RURAL MARKET PRICES FOR MAIZE AND
CASSAVA, 1970-1975

Year Maize Ratio Cassava Ratio

Rp./kg.
1970 15.4 127 5.3 152
1971 13.9 148 5.3 143
1972 26.0 105 9.2 107
1973 28.9 123 9.1 185
1974 38.1 123 11.7 116
1975 50.6 118 14.8 119

Rural Market Prices

Note: Ratio = Farmgate Prices X 100

SOURCE: Booth 1979.

 - 22 -

Conclusions

Administering prices in Indonesia by setting floor and ceiling prices

essentially keeps the price of rice low and prevents its free adjustment by
market forces. Any increase in the price of rice has significant impacts.
First, the low-income group accounts for about one-third of the population and
they suffer a great loss of real income since rice purchases are a large
proportion of their budget. Second, since rice is used as a wage commodity, an
increase in its price will mean an increase in production costs. The commodity
produced will become less competitive, especially in the export market.
However, the dilemma becomes more apparent as the price falls, since people
will consume more and it becomes more difficult to attract consumers away from
rice.
Intensification programs have been undertaken by the government to
stimulate rice production. However, even though these efforts have been
successful, self sufficiency in rice has still not been achieved because
population and per capita rice consumption have been steadily increasing. The
gap between the amount of rice demanded and domestic production has been
fulfilled through imports. Such large imports represent a significant outflow
of foreign exchange.
It is clear that solutions concerning the demand and supply of rice
should be better integrated. A long run effort should be undertaken to
encourage people to change their food habits so that they will not identify
rice as the only basic staple food. Rice self-sufficiency goals, therefore,
should be changed into food-grain self sufficiency. Based on the results of
this study, consumers and producers of rice both respond to a change in its
price. Substitutability among food crops is determined not only by the
consumer's tastes and preferences, but also by price. The prices of food crops
other than rice tend to be more expensive for consumers but cheaper for farm
producers. This problem clearly indicates that the marketing of food products
needs improvement. If the government desires to keep the price of rice low to
consumers, similar activities should be undertaken for other food crops. On
the other hand, higher prices at the producer level would stimulate production.
In other words, if the government wants to administer prices, it should provide
similar treatment for all food crops.
 - 23 -

Literature Cited
( 1) Abbot, Geraldine W. 1967. Agriculture in Indonesia. ERS-Foreign 180.
U.S. Department of Agriculture--Economic Research Service, April.
( 2) Birowo, A. T. 1979. "Teknologi Pangan untuk Pembangunan Desa" (Food
Technology for Rural Development). PRISMA, June.
( 3) Booth, Anne. 1977. "Irrigation in Indonesia, Parts I and II." In
Bulletin of Indonesian Economic Studies, Vol. XIII No. 1 and 2.
Canberra: Australian National University, March-July.
( 4) Booth, Anne. 1979. "The Agricultural Survey, 1970-75." In Bulletin of
Indonesian Economic Studies, Vol. XV, No. 1. Canberra: Australian
National University, March.
( 5) BPS (Central Bureauj of Statistics). "Statistical Pocketbook of
Indonesia." Annual Statistics. 1970, 1973/1974, 1977/1978,
1980/1981. Biro Pusat Statistik Jakarta-Indonesia.
( 6) BPS (Central Bureau of Statistics). 1970-1976. Population Manpower and
Religious Affairs. Biro Pusat Statistik Jakarta-Indonesia.
(7) BPS (Central Bureau of Statistics). 1970-1980. "Indikator Ekonomi"
(Economic Indicators). Monthly Statistical Bulletin. Biro Pusat
Statistik Jakarta-Indonesia.
( 8) Foote, Richard J. 1958. Analytical Tools for Studying Demand and Price
Structures. Washington, D.C.: United States Department of
Agriculture, Agricultural Marketing Services, August.
( 9) Geertz, Clifford. 1963. Agricultural Involution: The Processes of
Ecological Change in Indonesia. Berkeley: University of
California Press.
(10) Goldman, Richard Harris. 1973. Seasonal Production Instability and Price
Formation in Indonesian Rice Markets, 1951-1970. Ph.D.
Dissertation. Stanford, Calif.: Stanford University, October.
(11) Hanna, Willard A. 1976. "Food in Indonesia." In Southeast Asia Series,
Vol. XXIV, No. 6.
(12) Hu, Teh-Wei. 1973. Econometrics: An Introductory Analysis. Baltimore,
Md.: University Park Press.
(13) Mears, Leon A., and Saleh Afif. 1963. "Carbohydrate Foods in the
Indonesian Diet." In Warta Research, Tahun ke IV,No. 1.
February.
(14) Mears, Leon A., 1976. "Indonesia's Food Problem, PELITA II/III." In
Economics and Finance in Indonesia, Vol. XXIV, No. 2. June.
(15) Mears, Leon A., 1978. "Problems of Supply and Marketing of Food in
Indonesia." In Bulletin of Indonesian Economic Studies. Vol. XIV,
No. 3. Canberra: Australian National University, November.
 - 24 -

(16) Mubyarto and Lehman B. Fletcher. 1966. "The Marketable Surplus of Rice
in Indonesia: A Study in Java and Madura." International Studies
in Economics. Monograph No. 4, October.
(17) Mubyarto. 1980. Politik Pembangunan Pertanian dan Pedesaan (Agriculture
and Rural Development Policy). Draft. Stanford, Calif.: Stanford
University, April.
(18) Mubyarto. 1971. "Estimating Rice Consumption: A Comment." In Bulletin
of Indonesian Economic Studies, Vol. VII, No. 3. Canberra:
Australian National University, November.
(19) Mubyarto. 1980. Programs to Achieve Equity in Rural Development: An
Evaluation of Indonesian Experience. Paper presented at the
Department of Agricultural and Applied Economics, University of
Minnesota, St. Paul, April 30.
(20) Roekasah, E. A., and Penny, D. H. 1976. "BIMAS: A New Approach to
Agricultural Extension in Indonesia." In Bulletin of Indonesian
Economic Studies, No. 7. 'Canberra: Australian National
University, June.
(21) Teken, Igusti Bagus and Kuntjoro. 1978. "Kebijaksanaan Pengadaan Pangan
Dewasa Ini dan di Masa Dantang." In Mimbar Sosial Ekonomi, No. 1,
Th. 1, February.
(22) Timmer, C. Peter. 1971. "Estimating Rice Consumption." In Bulletin of
Indonesian Economic Studies, Vol. VII, No. 2. Canberra:
Australian National University, July.
(23) Todaro, Michael P. 1977. Economic Development in the Third World. New
York: Longman Inc.
(24) Topan, Sopin. 1969. "An Economic Analysis of the Price of Thai Rice."
Unpublished Ph.D. Thesis. Columbus: Ohio State University.
(25) USDA. 1980. Foreign Agriculture Circular: Grains. FG-38-80. Foreign
Agricultural Service, December 19.