NTP Finally Increases, Palm Oil Prices Improve?

After three consecutive months, the Jambi Province Farmer's Exchange Rate (NTP) continued to decline with considerable changes, finally the NTP in August 2022 experienced a large enough increase.

Thursday (1/9/2022) BPS released various monthly strategic indicators, one of which attracted attention was the Farmer's Exchange Rate (NTP).

The NTP of Jambi Province in August 2022 was 129.58, up 8.21 percent compared to the NTP of the previous month.

The NTP for January-August 2022 has increased by 8.91 percent compared to the NTP for January-August 2021.

The increase in NTP was due to the Price Index Received by Farmers (It) increased by 6.39 percent, while the Price Index Paid by Farmers (Ib) decreased by 1.68 percent.

This indicates that the increase in the price index for agricultural production is higher than the decrease in the price index for goods and services consumed by households as well as the increase in production costs and additional capital goods.

The increase in FTT in August 2022 was influenced by the increase in FTT in four (4) agricultural sub-sectors, namely the Food Crops Sub-sector by 4.14 percent; People's Plantation Sub-sector by 10.07 percent; Livestock sub-sector by 0.32 percent; and Fisheries Subsector by 0.44 percent. Meanwhile, the Horticultural Crops Subsector experienced a decline of 5.24 percent.

The People's Plantation Sub-sector contributed the most to the increase in FTT in August Jambi Province.

In August 2022 there was an increase in the Value of People's Plantation Plants (NTPR) by 10.07 percent.

This happened because It increased by 8.24 percent, while Ib fell by 1.66 percent. The increase in IT in August 2022 was due to the increase in the index of the smallholder plantation group, especially oil palm and coconut commodities. Palm oil prices increased by an average of 24.38 percent compared to the previous month. Meanwhile, coconut commodity prices increased 0.59 percent compared to July 2022.

When viewed from the share of commodities to FTT as a whole, palm oil contributed to the increase in FTT in August 2022 by 8.31 percent. This share is the largest compared to other sub-sector commodities. In the last four months, it is illustrated that the significant changes in the price of palm oil have had a major impact on the rise and fall of FTT in Jambi Province.

NTP is a proxy indicator of farmers' welfare to see the level of ability/purchasing power of farmers in rural areas.

Independent smallholders are the main actors in the oil palm plantation sector. Therefore, the government should consider it important to pay special attention to smallholder plantations, and provide assistance with programs that are able to improve the welfare of farmers, including smallholder oil palm farmers.

Author : Budi Hartono, S.ST., M.Sc.

(Jambi Data/Distribution)