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Rice Supply Demand English

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This paper includes system dynamics modelling to understand rice-supply demand fluctuation in West Nusa Tenggara of Indonesia

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Rice Supply Demand English

  1. 1. Supply and Demand : A Case Study Rice on West Nusa Tenggara A System Dynamics Approach by : Muhamad Khairul Bahri GRADUATE PROGRAM DEVELOPMENT STUDI ES ( MASTER) SCHOOL OF ARCHI TECTURE, PLANNI NG AND POLI CY DEVELOPMENT I NSTI TUT TEKNOLOGI BANDUNG 2008
  2. 2. M. Khairul Bahri Phenomenon: Supply and Demand : A Case Study Rice on West Nusa Tenggara. Problem : Farming land has been converted to another uses like industry and real estate needs. This fact can threat sustainability supply and demand rice in West Nusa Tenggara ( A small province in eastern of Indonesia). We also face delay in rice impor and ekspor, price and rice-productivity fluctuation. + - Land Sector + - + + + New Farming Land Farming Land Land Conversion - - - + Rice Export + Conversion Factor From paddy to rice + Density - + + - - + + Paddy Production Rice Production Rice Supply + + Available Land + - Land Productivity - + + Surplus Rice Import Birth rate + population Death rate Supply and - - - Demand Sector + - Price of Rice Population Sector + + Rice Demand Variables Available Land (Ha) Factor Conversion from paddy to Land Productivity (ton/ha/yr) Rice (dimensionless) Farming Land (Ha) Population (People) Rice Price (Rp/kg) Fraction of new farming land (1/yr) Rice Supply (Ton/yr) Fertility (1/yr) Human Lifetime (yr) Rice Production (Ton/yr) Rice Demand (Ton/yr) Paddy Production (Ton/yr) Rice Export/Import (Ton/yr) Rice Stock (Ton) Stock Coverage (Year) Fraction Land Conversion (1/yr) Delay time in export dan import (year) Endogenous Exogenous Excluded Population (people) Fract Land Conversion (1/yr) Rice Subsidy Rice Supply (Ton/yr) Fract New Farming Land (1/yr) Rice black-market Rice Demand (Ton/yr) Avaiable Land (Ha) Price Inflation Rice Export/Import (Ton/yr) Fertility (1/yr) ; Human Lifetime (yr) Paddy Production (Ton/yr) Factor conversion paddy-rice (dimensionless) Farming Land (Ha) Fract paddy productivity (1/yr) New Farming Land (Ha/Yr) Rice consumption per capita (ton/jiwa/yr) Land Farming Conversion (Ha/Yr) Delay time in export dan import (yr) Birth and Death Rate (people/yr) Target of Rice-price (Rp/kg) Rice price (Rp/kg) The Causal Loop In the land sector, we can see that conversion make land farming going smaller time by time and in other side new farming process bounded by available land (density=land farming/available land). Rice demand will grow up by population growth so that in later time, supply and demand facing the serious situation.
  3. 3. M. Khairul Bahri Background The West Nusa Tenggara is one of provinces in Indonesia that famous with its wetland. Because of unsatisfied management, this province facing of unbalanced supply-demand, even its rice production greater than its rice demand. The local government sometimes can’t predict paddy production perfectly because of its production fluctuation and delay in import. In this paper, I will explain how important of suitable rice stock to cover rice production. The first simulation visualize business as usual situation and in the second we add rice stock to see what suitable rice stock’s impact on rice supply-deman and its price. The first model can anticipate fluctuation of rice production that supply can cover demand and further impact is price variation exist. The second model visualize that suitable rice stock can make a balanced supply- demand and guarantee target of rice price. In this model. We assume that export and import are continous process because rice is not durable good. The First Model available_paddy_in_start_time delay_time_import early_land_farming switch_import land_productivity available_land fract_conversion import_actual land_farming predicted_rice_production delay_information desired_import new_farming_growthland_farming_conversion fract_growth average_paddy_production harvest_land import_rice_corrected_2 sdva import_rice_corrected_1 normal_curve actual_paddy_production predicted_paddy_production past_time rice_demand paddy_rice_conversion paddy_productivity_per_ha rice_production_actual export_actual rice_supply export_actual export_rice_delaytime koreksi_export_1 import_actual predicted_rice_production switch_export rice_demand desired_rice_export fertility rice_consumption_per_capita predicted_rice_production population rice_export_corrected_3 birth_rate death_rate surplus_rice_actual human_lifetime rice_demand land_productivity supply_demand_ratio fract_paddy_productivity price_of_rice_actual rice_supply supply_demand_ratio paddy_productivity_per_ha targeted_of_price_rice paddy_produktivity_Dot
  4. 4. M. Khairul Bahri 1 5.550 570.000 2 1 2 1 2 2 2 2 2 560.000 5.500 1 1 1 1 1 11 targeted_of_price_rice 2 rice_demand 1 1 1 price_of_rice_actual 2 rice_supply 2 1 2 550.000 2 1 5.450 2 1 0,0 1,0 2,0 3,0 0,0 0,5 1,0 1,5 2,0 2,5 3,0 Time Time 2 952.086 300.000 952.085 2 land_farming 250.000 952.084 2 200.000 rice_production_actual 952.083 2 1 1 1 predicted_rice_production 150.000 1 2 952.082 2 1 2 1 100.000 952.081 1 0,0 0,5 1,0 1,5 2,0 2,5 3,0 2 1 Time 0,0 1,0 2,0 3,0 Time By the above diagrams, we can see that the first model visualize that rice production (supply) can’t cover rice demand so that actual price upper of targeted rice price. This simulation run without variation in paddy production (sdva= standard deviation of normal curve, we assume paddy production fluctuate in normal distribution. The below diagrams show of 4 % of standard deviaton (sdva=4%) 10.000 2 2 5.000.000 2 8.000 2 01 2 1 1 1 1 12 1 6.000 2 rice_demand 12 1 1 1 1 1 1 targeted_of_price_rice 1 2 rice_supply 4.000 2 2 2 2 2 price_of_rice_actual -5.000.000 2 2 2.000 -10.000.000 0,0 1,0 2,0 3,0 0,0 1,0 2,0 3,0 Time Time
  5. 5. M. Khairul Bahri The Second Model The first model now added with a new vaeriable named rice stock accompanied by stock ratio. These new variables are required to anticipate fluctuations in productivity and rice-price. Appropriated rice-stock is needed to minimize fluctuation impacts due to productivity and delay time. available_paddy_in_starting_time delay_time_import early_land_farming land_productivity available_land land_farming switch_1 fract_conversion import_actual predicted_rice_production delay_information new_farming_growth land_farming_conversion fract_growth harvest_land avg_paddy_production actual_paddy_production desired_import corrected_import_3 corrected_import_2 predicted_paddy_production delay_time_export normal_curve corrected_import_1 past_time paddy_productivity_per_ha export_aktual rice_production_actual export_aktual sdva rice_supply paddy_rice_conversion rice_demand available_rice_stock desired_export import_actual switch_export rice_outflow rice_demand corrected_export_1 desired_rice_stock fertility available_rice_stock rice_consumption_per_capita predicted_rice_production corrected_time population birth_rate death_rate corrected_export_3 corrected_export_2 human_lifetime land_productivity rice_demand fract_paddy_productivity predicted_rice_production required_land ratio_stock paddy_rice_conversion paddy_productivity_per_ha sdva switch_land_policy produktivitas_DOT paddy_demand coorected_time available_rice_stock rice_demand desired_rice_stock corrected_import_2 supply_demand_ratio paddy_productivity_per_ha ratio_stock rice_price_actual standby_supply reserved_stock stok_coverage rice_supply rice_price_targeted rice_demand rice_deficit
  6. 6. M. Khairul Bahri 1 2 500.000 1.200.000 2 1 400.000 1 1.000.000 2 1 rice_demand 300.000 1 2 import_actual 2 1 800.000 standby_supply 200.000 export_aktual 1 2 2 2 2 1 1 100.000 600.000 2 1 0 10 20 30 40 50 01 1 1 12 2 2 0 10 20 30 40 50 Time Time 7,0 5.550 paddy_productivity_per_ha 6,5 6,0 5.500 1 2 1 2 1 2 1 2 1 2 1 rice_price_targeted 1 rice_price_actual 5,5 2 5,0 5.450 0 10 20 30 40 50 4,5 Time 0 10 20 30 40 50 Time The above simulation is draw model on zero-productivity fluctuation (sdva=0). The above graphs also show the second model’s ability to balance supply -demand and price. The belows are graphs for sdva=4% (productivity fluctuation on normal standard deviation=sdva=4%). Those graphs show that on sdva=4%, the model can also balance supply-demand and the price.. 1 4e9 1.200.000 2 1 3e9 1.000.000 2 1 rice_demand 2e9 1 import_actual 1 1 2 800.000 standby_supply export_aktual 1 2 2 2 1e9 2 1 600.000 2 1 0 10 20 30 40 50 01 2 12 12 12 12 0 10 20 30 40 50 Time Time 350.000 5.550 1 300.000 1 2 1 2 5.500 1 2 1 2 1 2 1 2 1 2 1 250.000 12 rice_price_targeted 1 2 1 land_farming rice_price_actual 2 1 200.000 2 1 2 required_land 2 5.450 150.000 0 10 20 30 40 50 100.000 Time 0 10 20 30 40 50 Time
  7. 7. M. Khairul Bahri The above-right curve reveals we need the green land (special non converting farming land) of 300,000 ha to sustain supply-demand by local rice production (fifty years simulation). If there is no improvements in production technology policy and the green land is very important to guarantee local supply and demand.

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