Farmers’ Subsistence in Indonesian Rice Farming

Abstract

Along with the importance of the rice industry in the agricultural sector and rural development in Indonesia, it arguably requires the understanding of whether rice farmers have been experiencing changes in their agricultural practices. Within the existing literature, it is commonly found that most farmers in developing countries are characterized as subsistence farmers. This paper aims to explore what factors affecting the degree of farmers’ subsistence in the Indonesian rice industry. To this end, this study employed regression analysis using data from the national agricultural survey in 2014. The empirical results find that both the characteristics of farm households and rice on-farm characteristics have statistically significant effects on the farmers’ decision whether to commercialize or become subsistence. In addition, the farm gate price is also found to have a statistically significant effect, but the effect is found to be relatively small. In general, this study suggests that subsistence farming in the Indonesian rice industry is still significant though many literatures have emphasized the existence of structural change in the agricultural system in Indonesia.