DETERMINANTS OF THE FARMERS’ PRICE INDEX (NTP) ACROSS PROVINCES IN INDONESIA, 2020–2024

Abstract

This study aims to analyze the determinants of the Farmers’ Price Ratio (FPR) across provinces in Indonesia during the 2020–2024 period. The FPR is used as an indicator of farmers’ relative well-being because it reflects farmers’ ability to exchange their production output for household consumption needs and production costs. This study employs a quantitative approach using balanced panel data covering 33 provinces and five years of observation, resulting in 165 observations. The dependent variable in this study is the NTP, while the independent variables include the Consumer Price Index (CPI), rice productivity, corn productivity, and labor productivity. The analysis method used is panel data regression with model selection via the Chow test, Hausman test, and Lagrange Multiplier test. The test results indicate that the Random Effects Model is the best fit. The estimation results show that the CPI has a positive and significant effect on the NTP, while rice productivity, corn productivity, and labor productivity do not have a significant effect. These findings suggest that price dynamics play a more dominant role in explaining changes in the NTP compared to physical productivity. Therefore, policies aimed at improving farmers’ welfare should focus not only on increasing productivity but also on strengthening selling prices, controlling input costs, improving distribution, and enhancing market access.