Trend of The Farmers Term of Trade

Press Release BPS (Badan Pusat Statistik-Statistics Indonesia)

This article is mainly based on data/information from BPS Press Release: No. 59/08/Th. XVII, 4 Agustus 2014 

Farmer Term of Trade (FTT) July 2014 is 102.12 or increase 0.14 percent



FTT that obtained from comparison of index of price received by farmers (It) toward index of price paid by farmers (Ib), is one of indicators to see level of purchase power of farmers in rural area. FTT show term trade from agriculture product compared with goods and services that consumed or use in production cost. Higher FTT will also show the stronger of  purchasing power level of farmers.

Based on the finding of the observation for rural prices in 33 province in Indonesia on July 2014, National FTT increase 0.14 percent compared FTT June 2014, i.e. from 101.98 to 102.12. The increasing of FTT in July 2014 is caused the increasing of price index of agriculture production that relatively higher if compared to the increasing of price index of consumption goods and services by household or use for agriculture production.

The increasing of FTT in July 2014 is caused by the increasing of Subsector FTT of smallholder plantation by 0.15 percent, subsector of animal husbandry by 0.71 percent, and subsector of fishery by 0.97 percent. While, subsectors that faced decreasing of FTT are subsector of food crops by 0.19 percent and subsector of Horticulture 0.18 percent. Detail information can be seen table 1 below.

Index of price received by farmers (It): in July 2014, National (It) increased by 0.97 percent compared to (It) June 2014, i.e. from 113.18 to 114.07. The increasing (It) on July 2014 is caused by increasing of Subsectors (It) of food crops by 0.49 percent, subsector of horticulture 0.49 percent, subsector of smallholders plantation 0.88 percent, subsector of animal husbandry 1.20 percent and subsector of fishery 1.66 percent.

Index of price paid by farmers (Ib): By Ib, can be seen the price fluctuation of goods and service that consume by rural peoples, especially farmers that one of biggest community in rural area, also the price fluctuation of goods and service that needed to produce agriculture product.

In July 2014, National (Ib) increased by 0.65 percent compared to (Ib) in June 2014, i.e from 110.99 to 111.70. The increasing of (Ib) is caused by the increasing of all sectors, i.e.: Subsector of food crops by 0.68 percent, subsector of horticulture 0.67 percent, subsector of smallholder plantation 0.73 percent, subsector animal husbandry 0.48 percent, and subsector fishery 0.69 percent. See table 1 below.

If we compare to all subsector, food crops and horticulture are two subsectors that indicate decreasing of farmers purchasing power, especially food crops sector. This condition showed that food crops farmers quite far for getting appropriate payment from their working, specialty for paddy farmers. If this condition continue, food crops sector will not attractive anymore and if there is another opportunity, peoples will shift to other job or other sectors. The impact is to our national food security and can-not be achieved the self-sufficient (Swasembada) of National food.

Comparison between provinces

From 33 provinces that counted of their FTT, 19 provinces faced increasing and 14 provinces decreasing. The highest increasing of FTT in July 2014 is in Kepulauan Bangka Belitung province by 1.16 percent, otherwise, the highest decreasing of FTT is in North Sumatera province by 1.26 percent.

The highest increasing of FTT in Kepulauan Bangka Belitung  is caused the increasing on the subsectors of smallholder plantation, specialty for pepper commodity that increased 2.24 percent. While, FTT decreasing in North Sumatera province is happened because the decreasing significantly of subsector of  smallholder plantation, especially coffee commodity that decreased up to 7.48 percent. See table 2 below.