ANALYSIS OF RICE DEMAND IN RESPONSE TO RISING PRICES
DOI:
https://doi.org/10.15408/aj.v19i2.47199Keywords:
Rice Demand, Price Elasticity, Household Consumption, Rice Prices, Food PolicyAbstract
Rice plays a central role in the daily lives of Indonesians, not only as a staple food but also as a vital component of the country’s food security and economic stability. This study aims to analyze the impact of rising rice prices on rice demand in Indonesia, focusing on price and income elasticity estimates. Utilizing national time series data from 2008 to 2022 and regional data from Medan, Ambon, and Sidoarjo, this research employs both log-linear regression models and the QUAIDS econometric approach. This findings indicate that rice demand is price-inelastic, with a price elasticity of approximately –0.37 in the short term and –0.79 in the long term. Income elasticity is positive but inelastic (around 0.24), while population elasticity exceeds one (>1), indicating high sensitivity. This suggests that although rice prices have increased, demand has declined only marginally, primarily because rice is a staple commodity that is difficult to substitute. However, low-income households are disproportionately affected, as they allocate a significant portion of their income to rice. Policy recommendations include price stabilization programs, direct assistance for vulnerable groups, and food diversification campaigns to ensure national food security.
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