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Investigating the Effect of Rice Commodity Price Volatility on Provincial Capital Poverty: An Evidence from Indonesia

Poverty is one of the macro problems faced by all countries. These problems have different solutions depending on the character of the poor population in the country. One of the proposed solutions is to control prices so that the level of public consumption is maintained. The purpose of the study was to analyze the effect of rice prices on poverty and to map the condition of rice price movements related to poverty in provincial capitals in Indonesia. This study uses panel data from 34 provincial capitals in Indonesia from 2011 to 2020. The data was collected from the Central Bureau of Statistics of Indonesia and uses a panel regression model and important performance analysis (IPA). The results of this study indicated that the price of rice positively affects poverty in provincial capitals in Indonesia. The IPA results show that most provincial capitals in Indonesia are in areas with low poverty rates accompanied by low rice prices and areas with poor people but tend to have high rice prices compared to the average price of rice. It concludes that rice greatly influences the consumption needs of the people of provincial capital cities in Indonesia. This finding shows the importance of maintaining the stability of rice prices due to the large influence of rice price movements on the increase in the percentage of poor people. Suggestions should be given for subsidized rice distribution in areas with high prices.