Analysis of Rice Import Policy in North Sumatra

Indonesia is an agrarian country where most of the population depends on the agricultural sector to live and work. Therefore, the agricultural sector has an important role, especially to maintain food security in Indonesia. The increasing population growth can disrupt Indonesia’s food security; therefore, an import policy was carried out to increase rice stocks and stabilize national rice prices. Import activities carried out by a country are closely related to a country’s exchange rate movement. Data for 2010-2019 shows an increase in rice consumption in North Sumatra. Unfortunately, rice production does not support the increase in consumption, which shows a declining trend in the same year. The impact of this production and consumption gap is, undoubtedly, an increase in prices from 2010 to 2019. Therefore the government performed imports to stabilize rice prices and maintain rice stocks for the population. This study aims to analyze the effect of rice consumption, rice production, rice prices, and the rupiah exchange rate on rice imports in North Sumatra. This study uses the Error Correction Model to analyze the short-term and long-term of each variable. The results of data processing obtained that in the short term, rice prices and the rupiah exchange rate have no significant effect, while production and consumption have a significant effect on rice imports. In the long term, production, consumption, prices, and the rupiah exchange rate significantly affect rice imports.