The Formation of Indonesian Rice Policy: A Historical Perspective
Author(s)
Timmer, C. Peter
Abstract
An assessment is undertaken of the various elements which constitute the political economy of policy-making towards the rice economy. It is contended that the primary motive of public policy has been to regulate trade and market factors in such a way as to depress rice prices. In varying degrees, the self-perceived effectiveness, if not legitimacy of government authority, is directly related to its capacity in satisfying consumer demand for Indonesia’s major food crop. This is particularly the case for the urban sector where mass discontent, stimulated by rising rice prices, could constitute a potential challenge to established authority. The concern of policy-makers in maintaining low rice prices is further anchored in the persistence of government efforts to control inflation and in the recognized importance of maintaining a ceiling on rice prices in achieving this goal. Finally, it is suggested that this relatively conservative approach towards the rice economy is reflective of a more general lack of confidence in the supply elasticities of the smallholder producer and the efficiencies of the existing system of rice marketing. The impact of the above policy orientations has frequently resulted in a repetitive and self-defeating process of bureaucratic intervention in regulating the rice economy. In general, the rice farmer has seldom been given the incentive and terms of trade which would serve to induce higher productivity. Finally, in its effort to depress rice prices, the government has been unable to use pricing policy as an instrument in attaining its larger goal of reaching self-sufficiency in rice production.
