Analysis of Factors Affecting Farmers' Exchange Rate (NTP) in the Java Region

Gina Harlina; Unggul Heriqbaldi

doi:10.71094/vkj.v4i1.394

Authors

Gina Harlina Development Economics Study Program, Universitas Airlangga, Indonesia
Unggul Heriqbaldi Development Economics Study Program, Universitas Airlangga, Indonesia

DOI:

https://doi.org/10.71094/vkj.v4i1.394

Keywords:

Farmer Exchange Rate, Consumer Price Index, Gross Regional Domestic Product, rice prices, ADRL

Abstract

This study examines the determinants of the Farmers’ Terms of Trade (NTP) in Java, emphasizing the role of food inflation as reflected in the Consumer Price Index (CPI), the Gross Regional Domestic Product (GRDP) of the agricultural sector, and rice prices as a strategic commodity. The study employs quarterly data from 2017–2024 obtained from the Central Statistics Agency and other official sources. The Autoregressive Distributed Lag (ARDL) approach is applied to analyze both short-run and long-run relationships. The stationarity test results indicate that all variables are stationary at the first difference. The ARDL(1,1,1,1) estimation produces an R² of 0.9916, with a significant Error Correction Term (ECT) of -0.9527, confirming the presence of cointegration and a strong adjustment mechanism toward long-run equilibrium. Empirically, CPI, GRDP, and rice prices have a positive and significant impact on NTP in the long run, while their short-run effects are not statistically significant. Diagnostic tests confirm that the model is free from classical assumption problems, stable, and consistent. Causality tests reveal the dominant role of rice prices in influencing other variables. Robustness checks using the VECM approach further validate these findings, offering important policy implications.

Downloads

Download data is not yet available.

References

Arhan, T. N., Darma, R., & Munir, A. R. (2024). Analyzing factors influencing farmer term of trade for food crops: A case study of South Sulawesi, Indonesia. Universal Journal of Agricultural Research, 12(2), 418–428. https://doi.org/10.13189/ujar.2024.120220

Arintoko, A., Sambodo, H., & Priyono, R. (2024). Do international oil prices, exchange rates, and agricultural credit matter for farmers' terms of trade in Indonesia? Research on World Agricultural Economy, 6(1), 71–87. https://doi.org/10.36956/rwae.v6i1.1305

Arintoko, A., Sambodo, H., & Priyono, R. (2025). Determinants of agricultural household business terms of trade in Indonesia. International Journal of Economics and Financial Issues, 15(5), 130–138. https://doi.org/10.32479/ijefi.19501

Barrett, C. B. (2008). Smallholder market participation: Concepts and evidence. Food Policy, 33(4), 299–317. https://doi.org/10.1016/j.foodpol.2007.10.005

Birthal, P. S., Negi, D. S., Khan, M. T., & Agarwal, S. (2015). Is Indian agriculture becoming resilient to droughts? Food Policy, 56, 1–12. https://doi.org/10.1016/j.foodpol.2015.07.001

Coelli, T. J., & Rao, D. S. P. (2005). Total factor productivity growth in agriculture: A Malmquist index analysis of 93 countries, 1980–2000. Agricultural Economics, 32(S1), 115–134. https://doi.org/10.1111/j.0169-5150.2004.00018.x

Daud, I. K., Baruwadi, M. H., & Akib, F. H. Y. (2025). Analisis faktor-faktor yang mempengaruhi nilai tukar petani di Indonesia tahun 2019–2024. Jurnal Paradigma Ekonomika, 20(4). https://doi.org/10.22437/jpe.v20i4.51291

Farida, Y., Hamidah, A., Sari, S. K., & Hakim, L. (2024). Modeling the farmer exchange rate in Indonesia using the vector error correction model method. MATRIK: Jurnal Manajemen, Teknik Informatika, dan Rekayasa Komputer, 23(2), 309–322.

Headey, D., & Fan, S. (2008). Anatomy of a crisis: The causes and consequences of surging food prices. Agricultural Economics, 39(S1), 375–391. https://doi.org/10.1111/j.1574-0862.2008.00345.x

Ivanic, M., & Martin, W. (2018). Sectoral productivity growth and poverty reduction: National and global impacts. World Development, 109, 429–439. https://doi.org/10.1016/j.worlddev.2017.07.004

Jayne, T. S., Chamberlin, J., & Headey, D. D. (2014). Land pressures, the evolution of farming systems, and development strategies in Africa: A synthesis. Food Policy, 48, 1–17. https://doi.org/10.1016/j.foodpol.2014.05.014

Kharisma, B., & Indrawan, Z. M. S. (2023). Analysis of rice price transmission in West Java, Indonesia. Cogent Economics & Finance, 11(1), Article 2266198. https://doi.org/10.1080/23311932.2023.2266198

Murdy, S. (2017). Do prices affect farmer's terms of trade in Indonesia? Jurnal Manajemen dan Agribisnis, 14(3), 264–274. https://doi.org/10.17358/jma.14.3.264

Pingali, P. L. (2012). Green Revolution: Impacts, limits, and the path ahead. Proceedings of the National Academy of Sciences, 109(31), 12302–12308. https://doi.org/10.1073/pnas.0912953109

Reardon, T., Timmer, C. P., Barrett, C. B., & Berdegué, J. A. (2003). The rise of supermarkets in developing countries: Implications for agri-food systems and the rural poor. American Journal of Agricultural Economics, 85(5), 1140–1146. https://doi.org/10.1111/j.0092-5853.2003.00520.x

Renkow, M., Hallstrom, D. G., & Karanja, D. D. (2004). Rural infrastructure, transactions costs and market participation in Kenya. Journal of Development Economics, 73(1), 349–367. https://doi.org/10.1016/j.jdeveco.2003.02.003

Rizal, M. (2021). Pengaruh inflasi terhadap investasi pertanian di Indonesia. Jurnal Ekonomi Pertanian, 12(1), 45–60. https://doi.org/10.33476/j.e.k.p.v12i1.1530

Sari, R., et al. (2020). Analisis faktor-faktor yang mempengaruhi nilai tukar petani di Kabupaten X. Jurnal Pertanian Indonesia, 15(2), 100–115. https://doi.org/10.33476/j.p.i.v15i2.1743

Suharto, A. (2020). Analisis harga beras di pasar tradisional. Jurnal Pertanian Jawa Tengah, 8(2), 23–35. https://doi.org/10.33476/j.p.j.t.v8i2.1589

Supriyanto, A. (2022). Pengaruh PDRB terhadap kesejahteraan petani di Jawa. Jurnal Ekonomi Pertanian, 12(1), 15–28. https://doi.org/10.33476/j.e.k.p.v12i1.1517

Suri, O. T., Chamdra, S., Nendissa, D. R., & Mahendra, B. (2024). Changes in strategic food prices and farmers' terms of trade: Evidence from Indonesia. Anjoro: International Journal of Agriculture and Business, 5(2). https://doi.org/10.31605/anjoro.v5i2.4270

Syifa Aulia, S., Sulistiyo Rimbodo, D., & Ghafur Wibowo, M. (2021). Faktor-faktor yang memengaruhi nilai tukar petani (NTP) di Indonesia. JEBA (Journal of Economics and Business Aseanomics), 6(1), 44–59. https://doi.org/10.33476/j.e.b.a.v6i1.1925

Timmer, C. P. (2010). Reflections on food crises past. Food Policy, 35(1), 1–11. https://doi.org/10.1016/j.foodpol.2009.09.002