Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia

Did the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, this paper finds that the price shock created a forward-looking incentive to invest, which can dynamically enhance productivity in agriculture. It also...

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Main Authors:	Nose, Manabu, Yamauchi, Futoshi
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGENCY COSTS AGRICULTURAL ACTIVITY AGRICULTURAL DEVELOPMENT AGRICULTURAL ECONOMICS AGRICULTURAL INPUTS AGRICULTURAL LAND AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL TECHNOLOGIES AGRICULTURE ASSET HOLDINGS BEVERAGES BINDING CONSTRAINT CACAO CAPITAL INTENSITY CAPITAL INVESTMENT CAPITAL STOCK CASH FLOW CASSAVA CHANGES IN POVERTY CIVIL WAR COCOA COLLATERAL COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICES CONNECTIVITY CONSUMER PRICE CONSUMER PRICE INDEX CREDIT CONSTRAINTS CROP PRODUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISPOSABLE INCOME DOMESTIC MARKET ECONOMIC SHOCKS EFFECT OF LIQUIDITY EGGS EXPENDITURE EXPENDITURES EXPOSURE EXPOSURES FACTORS OF PRODUCTION FARM EFFICIENCY FARM SIZE FARMER FARMERS FARMING ACTIVITIES FINANCIAL ASSETS FINANCIAL MARKETS FINANCIAL SUPPORT FLOUR FOOD COMMODITIES FOOD CONSUMPTION FOOD CROP FOOD EXPENDITURE FOOD EXPENDITURES FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE INFLATION FOOD PRICES FRUITS FUTURE PRICE FUTURE PRICES GA HOUSEHOLD HEAD HOUSEHOLD SIZE HOUSEHOLD WELFARE HUMAN CAPITAL INCOME INCOME GAINS INCOME INEQUALITY INCOME SHOCK INCOME SHOCKS INFRASTRUCTURE PROJECTS INSURANCE INTEREST RATE INTERNATIONAL COOPERATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTMENT DECISION INVESTMENT DECISIONS IRRIGATION LAND ASSET LAND PRODUCTIVITY LAND SIZE LANDHOLDING SIZE LIQUID ASSETS LIQUIDITY LONG-TERM INVESTMENT LOW-INCOME COUNTRIES MAIZE MARKET INTEGRATION MARKET STRUCTURES MARKETING MEAT MILK NATURAL DISASTERS NUTRITION OUTPUT OUTPUTS PADDY POLITICAL ECONOMY POOR FARMERS POOR HOUSEHOLDS PORTFOLIOS POTATO PRICE CHANGE PRICE CHANGES PRICE EFFECT PRICE INCREASE PRICE INCREASES PRICE INFLATION PRICE LEVEL PRICE LEVELS PRICE UNCERTAINTY PRODUCER PRICES PUBLIC POLICY PURCHASING REGIONAL DISPERSION REGIONAL DUMMIES REGIONAL VARIATION REMOTE AREAS RISK PREMIUM RUBBER RURAL AREAS SAVINGS SCHOOLING SMALL FARMERS SUBSTITUTION SUBSTITUTION EFFECT TRANSACTION COSTS VEGETABLE CROPS VEGETABLES VILLAGE LEVEL VOLATILITIES VOLATILITY WHOLESALE PRICE
Online Access:	http://documents.worldbank.org/curated/en/2012/05/16259979/long-term-impacts-global-food-crisis-production-decisions-evidence-farm-investments-indonesia http://hdl.handle.net/10986/9356

id	okr-10986-9356
recordtype	oai_dc
spelling	okr-10986-93562021-04-23T14:02:44Z Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia Nose, Manabu Yamauchi, Futoshi AGENCY COSTS AGRICULTURAL ACTIVITY AGRICULTURAL DEVELOPMENT AGRICULTURAL ECONOMICS AGRICULTURAL INPUTS AGRICULTURAL LAND AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL TECHNOLOGIES AGRICULTURE ASSET HOLDINGS BEVERAGES BINDING CONSTRAINT CACAO CAPITAL INTENSITY CAPITAL INVESTMENT CAPITAL STOCK CASH FLOW CASSAVA CHANGES IN POVERTY CIVIL WAR COCOA COLLATERAL COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICES CONNECTIVITY CONSUMER PRICE CONSUMER PRICE INDEX CREDIT CONSTRAINTS CROP PRODUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISPOSABLE INCOME DOMESTIC MARKET ECONOMIC SHOCKS EFFECT OF LIQUIDITY EGGS EXPENDITURE EXPENDITURES EXPOSURE EXPOSURES FACTORS OF PRODUCTION FARM EFFICIENCY FARM SIZE FARMER FARMERS FARMING ACTIVITIES FINANCIAL ASSETS FINANCIAL MARKETS FINANCIAL SUPPORT FLOUR FOOD COMMODITIES FOOD CONSUMPTION FOOD CROP FOOD EXPENDITURE FOOD EXPENDITURES FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE INFLATION FOOD PRICES FRUITS FUTURE PRICE FUTURE PRICES GA HOUSEHOLD HEAD HOUSEHOLD SIZE HOUSEHOLD WELFARE HUMAN CAPITAL INCOME INCOME GAINS INCOME INEQUALITY INCOME SHOCK INCOME SHOCKS INFRASTRUCTURE PROJECTS INSURANCE INTEREST RATE INTERNATIONAL COOPERATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTMENT DECISION INVESTMENT DECISIONS IRRIGATION LAND ASSET LAND PRODUCTIVITY LAND SIZE LANDHOLDING SIZE LIQUID ASSETS LIQUIDITY LONG-TERM INVESTMENT LOW-INCOME COUNTRIES MAIZE MARKET INTEGRATION MARKET STRUCTURES MARKETING MEAT MILK NATURAL DISASTERS NUTRITION OUTPUT OUTPUTS PADDY POLITICAL ECONOMY POOR FARMERS POOR HOUSEHOLDS PORTFOLIOS POTATO PRICE CHANGE PRICE CHANGES PRICE EFFECT PRICE INCREASE PRICE INCREASES PRICE INFLATION PRICE LEVEL PRICE LEVELS PRICE UNCERTAINTY PRODUCER PRICES PUBLIC POLICY PURCHASING REGIONAL DISPERSION REGIONAL DUMMIES REGIONAL VARIATION REMOTE AREAS RISK PREMIUM RUBBER RURAL AREAS SAVINGS SCHOOLING SMALL FARMERS SUBSTITUTION SUBSTITUTION EFFECT TRANSACTION COSTS VEGETABLE CROPS VEGETABLES VILLAGE LEVEL VOLATILITIES VOLATILITY WHOLESALE PRICE Did the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, this paper finds that the price shock created a forward-looking incentive to invest, which can dynamically enhance productivity in agriculture. It also finds that the impact of the price shock on investment behavior differs by initial wealth. In response to price increases, wealthy farmers invested more in productive assets, while poor farmers increased their financial savings as well as consumption. Price spikes relax liquidity constraints, which increases investments among the richer while do so savings and consumptions among the poor, possibly leading to diverging income inequality in the long run. 2012-06-29T22:11:50Z 2012-06-29T22:11:50Z 2012-05 http://documents.worldbank.org/curated/en/2012/05/16259979/long-term-impacts-global-food-crisis-production-decisions-evidence-farm-investments-indonesia http://hdl.handle.net/10986/9356 English Policy Research Working Paper; No. 6065 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Indonesia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	AGENCY COSTS AGRICULTURAL ACTIVITY AGRICULTURAL DEVELOPMENT AGRICULTURAL ECONOMICS AGRICULTURAL INPUTS AGRICULTURAL LAND AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL TECHNOLOGIES AGRICULTURE ASSET HOLDINGS BEVERAGES BINDING CONSTRAINT CACAO CAPITAL INTENSITY CAPITAL INVESTMENT CAPITAL STOCK CASH FLOW CASSAVA CHANGES IN POVERTY CIVIL WAR COCOA COLLATERAL COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICES CONNECTIVITY CONSUMER PRICE CONSUMER PRICE INDEX CREDIT CONSTRAINTS CROP PRODUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISPOSABLE INCOME DOMESTIC MARKET ECONOMIC SHOCKS EFFECT OF LIQUIDITY EGGS EXPENDITURE EXPENDITURES EXPOSURE EXPOSURES FACTORS OF PRODUCTION FARM EFFICIENCY FARM SIZE FARMER FARMERS FARMING ACTIVITIES FINANCIAL ASSETS FINANCIAL MARKETS FINANCIAL SUPPORT FLOUR FOOD COMMODITIES FOOD CONSUMPTION FOOD CROP FOOD EXPENDITURE FOOD EXPENDITURES FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE INFLATION FOOD PRICES FRUITS FUTURE PRICE FUTURE PRICES GA HOUSEHOLD HEAD HOUSEHOLD SIZE HOUSEHOLD WELFARE HUMAN CAPITAL INCOME INCOME GAINS INCOME INEQUALITY INCOME SHOCK INCOME SHOCKS INFRASTRUCTURE PROJECTS INSURANCE INTEREST RATE INTERNATIONAL COOPERATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTMENT DECISION INVESTMENT DECISIONS IRRIGATION LAND ASSET LAND PRODUCTIVITY LAND SIZE LANDHOLDING SIZE LIQUID ASSETS LIQUIDITY LONG-TERM INVESTMENT LOW-INCOME COUNTRIES MAIZE MARKET INTEGRATION MARKET STRUCTURES MARKETING MEAT MILK NATURAL DISASTERS NUTRITION OUTPUT OUTPUTS PADDY POLITICAL ECONOMY POOR FARMERS POOR HOUSEHOLDS PORTFOLIOS POTATO PRICE CHANGE PRICE CHANGES PRICE EFFECT PRICE INCREASE PRICE INCREASES PRICE INFLATION PRICE LEVEL PRICE LEVELS PRICE UNCERTAINTY PRODUCER PRICES PUBLIC POLICY PURCHASING REGIONAL DISPERSION REGIONAL DUMMIES REGIONAL VARIATION REMOTE AREAS RISK PREMIUM RUBBER RURAL AREAS SAVINGS SCHOOLING SMALL FARMERS SUBSTITUTION SUBSTITUTION EFFECT TRANSACTION COSTS VEGETABLE CROPS VEGETABLES VILLAGE LEVEL VOLATILITIES VOLATILITY WHOLESALE PRICE
spellingShingle	AGENCY COSTS AGRICULTURAL ACTIVITY AGRICULTURAL DEVELOPMENT AGRICULTURAL ECONOMICS AGRICULTURAL INPUTS AGRICULTURAL LAND AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL TECHNOLOGIES AGRICULTURE ASSET HOLDINGS BEVERAGES BINDING CONSTRAINT CACAO CAPITAL INTENSITY CAPITAL INVESTMENT CAPITAL STOCK CASH FLOW CASSAVA CHANGES IN POVERTY CIVIL WAR COCOA COLLATERAL COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICES CONNECTIVITY CONSUMER PRICE CONSUMER PRICE INDEX CREDIT CONSTRAINTS CROP PRODUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISPOSABLE INCOME DOMESTIC MARKET ECONOMIC SHOCKS EFFECT OF LIQUIDITY EGGS EXPENDITURE EXPENDITURES EXPOSURE EXPOSURES FACTORS OF PRODUCTION FARM EFFICIENCY FARM SIZE FARMER FARMERS FARMING ACTIVITIES FINANCIAL ASSETS FINANCIAL MARKETS FINANCIAL SUPPORT FLOUR FOOD COMMODITIES FOOD CONSUMPTION FOOD CROP FOOD EXPENDITURE FOOD EXPENDITURES FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE INFLATION FOOD PRICES FRUITS FUTURE PRICE FUTURE PRICES GA HOUSEHOLD HEAD HOUSEHOLD SIZE HOUSEHOLD WELFARE HUMAN CAPITAL INCOME INCOME GAINS INCOME INEQUALITY INCOME SHOCK INCOME SHOCKS INFRASTRUCTURE PROJECTS INSURANCE INTEREST RATE INTERNATIONAL COOPERATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTMENT DECISION INVESTMENT DECISIONS IRRIGATION LAND ASSET LAND PRODUCTIVITY LAND SIZE LANDHOLDING SIZE LIQUID ASSETS LIQUIDITY LONG-TERM INVESTMENT LOW-INCOME COUNTRIES MAIZE MARKET INTEGRATION MARKET STRUCTURES MARKETING MEAT MILK NATURAL DISASTERS NUTRITION OUTPUT OUTPUTS PADDY POLITICAL ECONOMY POOR FARMERS POOR HOUSEHOLDS PORTFOLIOS POTATO PRICE CHANGE PRICE CHANGES PRICE EFFECT PRICE INCREASE PRICE INCREASES PRICE INFLATION PRICE LEVEL PRICE LEVELS PRICE UNCERTAINTY PRODUCER PRICES PUBLIC POLICY PURCHASING REGIONAL DISPERSION REGIONAL DUMMIES REGIONAL VARIATION REMOTE AREAS RISK PREMIUM RUBBER RURAL AREAS SAVINGS SCHOOLING SMALL FARMERS SUBSTITUTION SUBSTITUTION EFFECT TRANSACTION COSTS VEGETABLE CROPS VEGETABLES VILLAGE LEVEL VOLATILITIES VOLATILITY WHOLESALE PRICE Nose, Manabu Yamauchi, Futoshi Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
geographic_facet	East Asia and Pacific Indonesia
relation	Policy Research Working Paper; No. 6065
description	Did the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, this paper finds that the price shock created a forward-looking incentive to invest, which can dynamically enhance productivity in agriculture. It also finds that the impact of the price shock on investment behavior differs by initial wealth. In response to price increases, wealthy farmers invested more in productive assets, while poor farmers increased their financial savings as well as consumption. Price spikes relax liquidity constraints, which increases investments among the richer while do so savings and consumptions among the poor, possibly leading to diverging income inequality in the long run.
format	Publications & Research :: Policy Research Working Paper
author	Nose, Manabu Yamauchi, Futoshi
author_facet	Nose, Manabu Yamauchi, Futoshi
author_sort	Nose, Manabu
title	Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
title_short	Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
title_full	Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
title_fullStr	Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
title_full_unstemmed	Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia
title_sort	long-term impacts of global food crisis on production decisions : evidence from farm investments in indonesia
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/05/16259979/long-term-impacts-global-food-crisis-production-decisions-evidence-farm-investments-indonesia http://hdl.handle.net/10986/9356
_version_	1764409255424688128

Long-term Impacts of Global Food Crisis on Production Decisions : Evidence from Farm Investments in Indonesia

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