Farmers’ welfare level based on Farmer’s terms of Trade (FTT) index

Asmara R., Hanani N. and Fahriyah F.
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Asmara R.: University of Brawijaya
Hanani N.: University of Brawijaya
Fahriyah F.: University of Brawijaya

Russian Journal of Agricultural and Socio-Economic Sciences, 2016, vol. 60, issue 12, 33-38

Abstract: The role of agriculture in labor absorption is still relatively high. In 2014, the agricultural sector employment reached 34%. In contrast with this condition, the added value generated by the agricultural sector accounted for only 14:43%. This causes the high poverty in rural communities who generally work in the agricultural sector (63% Household poor live in rural areas). Therefore, the government made many policies to improve farmer’s welfare. The purpose of this study was to assess the welfare of farmers by calculating Farmer’s Terms of Trade (FTT) Index. The study was conducted in Jombang Regency. Data was gathered by survey method on 183 households of farmers. The results showed that Farmer’s Terms of Trade (FTT) Index in Jombang in 2015 decreased from the year 2014 amounted to 0.117% from 112.1 became 112.0. The decreasing of FTT index was caused by the growth rate of price received index (IT) is lower than the growth rate of price paid index (IB). Agricultural policy using price producer instrument will be effective to improve farmer’s welfare when policy on price control at the consumer level also conducted in the same time.

Keywords: WELFARE; FTT; PRICE RECEIVED INDEX; PRICE PAID INDEX (search for similar items in EconPapers)
Date: 2016
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