Do International Oil Prices, Exchange Rates and Agricultural Credit Matter for Farmers’ Term of Trade in Indonesia? Empirical Evidence of Multiple Thresholds and Asymmetric Effects

Arintoko Arintoko, Sambodo Herman and Priyono Rakhmat

Research on World Agricultural Economy, vol. 6, issue 1

Abstract: Farmers still survive as a livelihood for some of the Indonesian population as the dominant economic sector shifts from agriculture to industry and services. This study investigates the influence of international prices of crude oil, fertilizer, and animal feed ingredients, as well as exchange rates, domestic inflation, agricultural credit, and food production indices on farmers' terms of trade (TOT). The study applies a Nonlinear Autoregressive Distributed Lag model with multiple thresholds. The data used are monthly data for the period January 2010 to October 2023. Through multiple thresholds, the negative impact of world oil prices is significant in the middle level of changes in oil prices on farmers' TOT. Fuel subsidies to farmer households allow the impact of significant changes in oil prices to dampen farmers' TOT. Depreciation of the rupiah exchange rate significantly reduces farmers' TOT. Conversely, appreciation significantly increases farmers' TOT. Domestic inflation has significantly pressured farmers' TOT in the short run, while agricultural credit significantly increased farmers' TOT. The food industry production index significantly encourages an increase in farmers' TOT. The subsidy programs, especially fuel and fertilizer subsidies directly to farmers, are the action to reduce the impact of rising prices of imported crude oil and fertilizer.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/401191/files/RWAE-1305-6%281%29-71-87.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:reowae:401191

DOI: 10.22004/ag.econ.401191

Access Statistics for this article

More articles in Research on World Agricultural Economy from Nan Yang Academy of Sciences Pte Ltd (NASS)
Bibliographic data for series maintained by AgEcon Search ().