Organization of study The Price Transmission in Rice Market Chain in Indonesia

Table 1 shows that rice production has constant trend for 2000-2012 period. The rice production in 2012 is 32,17 higher than in 2000. Even though the rice production increase, the consumption of rice increase higher. Therefore there is a gap between rice production and rice consumption. This gap is compensated by importing rice from world market. Indonesia has been importing rice from Thailand and Vietnam since the 1998 crisis. The rice import of Indonesia since 2000 to 2012 has a declining trend. Even in the period of crisis in 2007-2010, Indonesia imported less than 0,5 MT. Figure 3 Indonesian Rice Import in 2000-2012 Source: FAS USDA 2000-2012 The Indonesian rice production increases steadily because the harvested area also grow steadily. In 12 years the harvested area only increase 13,97 and the national average for yield also not really significant increase. The yield in 2012 is still at 5,1 tonha, it is under the ideal yield at 8 tonha. The lack of harvested area needs the enhancement of yield to compensate it. The enhancement of yield still difficult for Indonesia, there are still many problem to be solved. The encouragement of new technology to produce higher yield and more stable production along the year are needed. The extention program for farmers to use new technology also needs to do continuously and massively to support the enhancement of yield and rice production in Indonesia. 0,000 0,500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 imports Table 1 Harvested area, production, and yield of rice in Indonesia in 2000-2012 Year Harvested Area Ha Production Ton Yield TonHa 2000 11.793.475 51.898.852 4,40 2001 11.499.997 50.460.782 4,39 2002 11.521.166 51.489.694 4,47 2003 11.488.034 52.137.604 4,54 2004 11.922.974 54.088.468 4,54 2005 11.839.060 54.151.097 4,57 2006 11.786.430 54.454.937 4,62 2007 12.147.637 57.157.435 4,71 2008 12.327.425 60.325.925 4,89 2009 12.883.576 64.398.890 4,99 2010 13.253.450 66.469.394 5,02 2011 13.203.643 65.756.904 4,98 2012 13.440.940 68.594.067 5,10 Source: BPS 2012 The rice self-sufficiency of Indonesia always above 90, it means the domestic consumption needs almost can be met by domestic rice production. More than half of the national rice production is contributed by Java Island as the most fertile land and the biggest farm labor forces. Java produces about 2,5 MT per year or about 52 of the national rice production. The other islands like Sumatera, Sulawesi, Kalimantan, and Bali with Nusa Tenggara contribute 24, 11, 7, and 5 of the national rice production, respectively. The major rice producing areas are West Java, East Java, Central Java, South Sulawesi, and North Sumatera. In other hand for the other islands such as Kalimantan, Papua, Maluku, and small islands are not suitable to be planted by paddy. They only contribute by 1 of national production BPS 2012. Table 2 Harvested area, production, and yield of paddy per province in 2011 Province Harvested area Ha Production MT Yield TonHa North Sumatera 757.194 3.611.244 4,77 South Sumatera 772.803 3.332.799 4,31 Subtotal Sumatera 3.418.891 15.654.258 4,58 West Java 1.959.686 11.467.516 5,85 Central Java 1.748.611 9.429.506 5,39 East Java 1.945.712 10.533.607 5,41 Subtotal Java 6.192.549 34.148.340 5,51 West Nusa Tenggara 416.079 2.056.879 4,94 Subtotal Bali Nusa Tenggara 757.866 3.473.210 4,58 West Kalimantan 441.920 1.379.411 3,12 South Kalimantan 490.528 2.001.274 4,08 Subtotal Kalimantan 1.289.917 4.557.268 3,53 Central Sulawesi 216.174 1.023.720 4,74 South Sulawesi 907.555 4.514.849 4,97 Subtotal Sulawesi 1.491.480 7.267.672 4,87 Other provincesislands 73.676 284.435 3,86 Total Indonesia 13.224.379 65.385.183 4,94 Source: BPS 2012 In Indonesia with sun shines all year around, farmers can grow paddy three times a year. First crop season lasting from October to March, second crop from April to August and third crop from August to December. The first crop produces the main harvest. It produces about 60-65 of total national rice production in a year. The second crop produces about 25-30 and the third crop produces about 5-15 of total national rice production Ellis 1993 in Sari 2010. Farmers manage their paddy cropping pattern adjusted with the availability of water. Paddy which is planted in Indonesia is wet type; it needs a lot of water for growing. Therefore mostly all farmers growing their paddy in rainy season October-March. Whereas in the dry season not all farmers growing paddy, some of them growing