Analysis of Agricultural Rice Production in Jambi: Study of Acreage Response Under Price Policy Program

Abstract

The main objective of this research were to analyze the impact of some agricultural investments in rice production, The increasing trend of rice production in Jambi during the years of study (1986-2010) has been resulted from considerable increase in government improving policy programs, such as support price, and input subsidy programs. The variations of acreage, yield, and output have been affected also by the price of output and input such as fertilizer. The more effectiveness between price support policy and input subsidy policy depend on the higher magnitude between the significant coefficients of these two variables. The first policy implication from the findings of this study is that the price support policy is more effective and efficient to increase the acreage. The effect of government support prices for rice is very important in analyzing the acreage response. Since the role of government support prices in this new environment has received very much attention in policy implications. A method of measuring price expectation for analyzing acreage response is used when the influence of price support and market phenomena varies with market conditions. It assumes that the effect of changes in government policies because similar programs for acreage control and price support are likely form of future policies. A method of evaluating support, and acreage restriction is developed and tested to see the impact of changing government programs. The results show that when the support price is much below the expected market price, the truncationeffect is negligible and the price support program has only a limited impact on acreage decisions. Alternatively, as the support price levels, the truncation effects become larger, and the resulting impact on acreage decisions is more pronounced.