Analysis of Changes in Farmer’s Exchange Rate and Their Effect on Farming in Indonesia

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Abstract
The development of the Farmer’s Exchange Rate (FER) index at the beginning of the COVID-19 pandemic in Indonesia. The effort to scrutinize the phenomenon of the decreasing FER is important and relevant for a deep study, especially related to its effects on farming activities. This study will observe FER changes and their effects on farming, especially rice farming. Methods of analysis include: (1) Descriptive Analysis (in the form of tables and graphs/diagrams only), (2) Quantitative Analysis (using multiple regression models). The results of the analysis of various factors affecting the FER show that the variable of the price of paddy at the farmer level has a positive and real effect on the FER. In this case, if the price of paddy increases by Rp 10, then the FER will increase by 0.157 units. Furthermore, the price of diesel fuel for agricultural equipment and machinery also has a positive and real effect on the FER. In this case, if there is an increase in the price of Rp 10, then there will be an increase in the FER of 0.052 FER units. It can be concluded that the influence of FER shows that the variable of unhusked-paddy price at the farm level has a positive and significant effect on FER. It can be made by farmers by achieving maximum possible economic efficiency through improvements in technical efficiency and optimization of resource reallocation (allocative efficiency), supported by output price incentive policies in order to obtain an adequate level of income.

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