Farmers' Exchange Rates and Agricultural Household Business Exchange Rates Drop, This is the Cause

In the Official Statistics News Release Monday (1/8/2022), Head of BPS Jambi Province, Agus Sudibyo said the Farmer's Exchange Rate (NTP) fell 5.95 percent from 127.31 in June 2022 to 119.74 in July 2022. Likewise with The Agricultural Household Business Exchange Rate (NTUP) also decreased by 5.26 percent from 127.42 in June 2022 to 120.72 in July 2022. The reason was that the Price Index Received by Farmers (It) fell quite significantly at 4.93 percent while the Price Paid Farmers Index (IP) and the Production Cost and Capital Goods Addition Index (BPPBM) rose by 1.07 percent and 0.34 percent, respectively. Commodities that contributed to the decline in the Price Index Received by Farmers (It) included oil palm, areca nut, potatoes, coffee and coconut. The price of these commodities fell significantly, which affected the decline in the Price Index Received by Farmers (It) in June compared to the previous month. The opposite condition occurs in commodities consumed by farmers as measured by the Price Paid Farmers Index (IP). Commodities contributing to the increase in IP include red chilies, cayenne pepper, green chilies, shallots and vegetable tomatoes. Likewise, production costs and increased capital costs such as herbicides, transportation costs, gum vinegar, and so on have caused the Production Cost Index and Capital Goods Addition (BPPBM) to increase as well. The NTP value itself is calculated by dividing It by Ib and BPPM. So compared to the previous month, NTP in June decreased. Meanwhile, if you divide It by BPPM only, then you get the value of NTUP which also decreased in June. So it can be concluded that the exchange rate at the agricultural level decreased compared to the previous month. The head of the Jambi Province BPS said that since April, when viewed from the graph of the development of NTP and NTUP, the trend has decreased significantly, which is quite worrying. The decrease in NTP and NTUP must be a common concern because if it continues to decline, it means that the purchasing power of farmers is decreasing where the price of agricultural products decreases while production costs increase. When viewed based on its subsector, only horticultural crops experienced an increase with the rest experiencing a decline. The biggest decline occurred in smallholder plantations which was the impact of the recent decline in the prices of palm, coconut and areca nut. The decline in NTP and NTUP can be seen whether it will affect economic growth and poverty in the next quarter. It is hoped that NTP and NTUP will improve in the coming months.