Whenever young researcher faces higher living cost (can be caused by marriage, inflation, etc), it’s like taxing their more-idealistic-lower paid job. The substitution effect will makes him still enjoy more-idealistic-lower-paid job but the income effect will make him work more for the lower-idealistic-higher-paid job. The final result would depend on the magnitude of these two effects. If the income effect is higher than the substitution effect, then he will choose to do more higher-paid job rather than the lower paid one.

When the young researcher is still poor (compare to his own expenditure) the income effect will tend to be higher than the substitution effect. When he’s getting richer, the substitution effect will tend to be higher, because the cause of choosing lower idealistic even though higher-paid job is also getting higher. This will cause him to choose more of the idealistic job.

The decision will of course depend on the value of idealistic job and money for each person. Rich and poor will also depend on each person circumstances, family needs and life style, not in nominal term. Some will choose only to do the lower-idealistic-higher-paid job, and some choose to do only the more-idealistic-lower-paid job. Some will choose to do both. I, myself, am more interested to do both (if possible ;))

The best solution for government bodies or Indonesian research institute is to provide more incentive for the young researcher. It can be in the form of income or other form of appreciation such as the opportunity to develop their capacity as researcher. These opportunity might include scholarship, encouragement to write in academics journal or newspaper, training or even direct coaching to the potential young researcher like what has been done by Pak Sadli (almarhum) to the 3 Diva (Mari Pangestu, Sri Mulyani and Miranda Goeltom). For this community such appreciation and opportunity to learn can be an interesting incentives for young researcher, not only money.

Foreword: Being living in Germany is quite a valuable one. I have been among people with educational background in natural science and it is quite difficult to have a serious discussion about social sciences phenomena. But let me share some lessons I get there based on my simple think.

I am so impressed with the Government policy that enables people here to travel cheaply if they do it in a group. It is a simple but effective policy. In Indonesia, if some people (let say more than 3 people) want to travel (no matter how long the distance we will take), it will be cheaper if they do it by car. That is why it is not a surprise to see how many cars there (especially in Jakarta). In Germany, people are encouraged to travel in group by public transportation since there will be some benefits received.

The most popular one is wochenendekarte. Wochenendekarte is kind of promotion card for traveling among the cities in Germany where the price of card depends on the distance. for example, if I want to travel alone from Marburg to Frankfurt (it is like from Bogor to Jakarta), I have to pay about 27 € (or about 400.000 Rupiah) for two way ticket. But If I travel in a group (up to 5 people), we just have to pay about 30 € or 6 €/ person or just 90 Rupiah. Without Wochenendekarte, if I and some friend want to travel (let say we are 5), we have to pay about 135 €. It is very costly and we will be looking for alternative transportation. If one or some of us already have a car, we absolutely prefer to travel with a car since the cost of transportation will be about 60 € (the price of fuel in Germany is 1.8€/liter). So it is considerably different between traveling by public transportation and by private car.

This impressive policy, however, will be difficult to be applied in Indonesia since the main problem of public transportation in Indonesia is not the price but the quality of service. People will pay for just being comfortable any way.

But what I love most from Germany? The huge number of subsidy for students. The implication is, in next 4 months I will pay just 65€/ semester for a semesterkarte that makes me possible to travel freely among many cities.

The hardwork for one semester had finished. I handed in my thesis on May 14, 2008 with the title Breaking the Trap? Hybrid Maize for Household Food Security: A Counterfactual Analysis from Southern and Central Malawi. Despite the fact that I was able to catch the deadline, I wasn't really satisfied with my work. I wish that I had more time with it (as usual.. :)).

A bit different from some of my friends, I took a country which is not my own country as a case study. This became the first challenge as I had limited idea what was going on in this particular country before I came to do my fieldwork for two months there. But, it was amusing in the sense that I experienced doing fieldwork with the team from different nationalities, talking with the local people who can't speak English that I found amazing as we can understand each other with out knowing each other languange (we had intrepreter though, but sometimes there were cases that I should went out to the field alone with the locals who sometimes able to comunicate more in English and sometimes not).

OK, now I am starting with the writing process itself. When I started to write my thesis, I was one step behind of my classmates who continued from their research proposal. I should start from the very begining as : I changed my topic!! I needed to do that as the data that i had collected in the field about my previous topic was very limited, and it was impossible to do regression with this number of observations. OK, i should stop complaining before this post become too long as there are long lists of complaints. :)

This is the abstract of my thesis:

Malawi has changed her position from one of the most food insecure countries to one that is now able to export and donate maize for her neighbors. Subsidy of agriculture inputs and favorable rainfall in 2006/2007 growing season are two explanations of this. Nevertheless, whereas food security at the national level was achieved, some households are still experiencing lack of food.

This study concerns how the condition of food security is changed in the group of “new” adopters of hybrid maize and fertilizer. The term “new” refer to farmers who grow hybrid maize in 2006/2007 cropping season, while they did not grow in the 2005/2006 cropping season. Propensity score matching and difference-in-difference method are used in this study by utilizing two years longitudinal data of 154 households from Southern and Central Malawi.

This study first analyzes factors affecting hybrid maize and fertilizer adoption, followed by a counterfactual analysis of the adoption of hybrid maize and fertilizer on land allocated for maize, yield per hectare, total harvest per household that will be translated to the income, and maize available per capita within household.

The result of the logit model of adoption shows that membership in a farmer organization and households’ access to credit increase the probability that farmers will adopt the package, while female headed household have lower probability to adopt.

In addition, the counterfactual analysis indicate that adoption of hybrid maize would be able to prevent each household member from being hungry for 6-7 months. However, the result also shows that growing hybrid maize is not profitable unless inputs are being subsidized, as farmers have a small amount of land. Dividing the households into some categories, we found that land constraint and female headed household will not enjoy the benefit in term of increase of food available for each member as the result of uptaking the package, while secondary education will boost the benefit.

Rice is staple food for Asians and many other people in this planet. Therefore, its price increase recently could be categorized as global phenomenon. Thus, a further investigation of policies concerning this commodity is worthwhile for Indonesia. Prof. Neil McCulloch from The Asia Foundation has a study on “Rice Policy in Indonesia – Evidence and Options”, presented in the Launch of Bulletin of Indonesia Economic Studies’ Special Issue, on CSIS Jakarta, April 24 2008.

He presents four sub themes: the importance of rice for the poor, volume of rice import needed, few options to stabilize rice prices, and the world rice market related to Indonesia.

Data shows that rice is the most important commodity for the poor. The poor spend almost a quarter of their budget just on rice whereas the rich spend only 9.4%. His study also finds that most farmers are net consumers of rice, which means that their consumption of rice is more than their production. Furthermore, if rice prices increase, household with large areas of sawah will gain the most. The reason is that only top fifth of padi farmers who account for more than half of the harvested area.

The country’s data cannot tell us volume of import needed but it is clear that Indonesia historically has been a rice importer. Data of production from “Eye estimate” overestimates data from Household Survey while national data of consumption is underestimated.

In stabilizing rice prices, Indonesia can learn from the experiences of China, Bangladesh, and Madagascar. China succeeded stabilizing its rice prices by employing method of buffer stocks but it bore large fiscal cost. Bangladesh also succeeded by importing great amount of rice when the local price was equal to the world price. After that, local price was stable although world price went upward. Madagascar’s experience teaches to be careful with what the government says since its government unintentionally exacerbated price instability by destroying incentives for private trade.

The world rice market was actually stable in 1980-90s but prices are now increasing due to supply shocks in Vietnam and Australia, Indian politics, sky-scraping oil prices, falling of US dollar, and unfortunate signaling from the Philippines and India. Therefore, countries are now attempting to secure their supplies. However, there is no fundamental need for a crisis because rice supply has similar volume to expected consumption.

Lastly, four implications for rice policy could be taken. First, it is a choice between self-sufficiency and poverty reduction because they require quite different policies. Second, revitalizing agriculture is essential, but should be done in a ‘crop neutral’ way which allows farmers to decide the most profitable way of using their land. Third, rice price stabilization should be automatic and based on prices. When world prices are more stable than domestic prices, private sector should be allowed a larger role in stabilizing prices. Fourth, coordinated action among nations should be taken to solve the current crisis.

Pantjar Simatupang from USAid also carries out a research on “Problems Facing the Rice Industry and the Ways to Help”. Here it is his findings from the research.

Paddy production has been decelerating in the 1982-2005 period. The phenomenal increase of paddy production in 2007 should be accepted with caution and would probably not sustain in the near future. The reason is that Indonesian rice industry has reached its maturity stage and may have been entering the stage of declining production capacity and efficiency at every key segment: farming, harvesting, threshing, drying, and milling.

Given the high volatility of the world rice market, rather than debating rice exportation, this country’s energy should be focused on how to increase domestic rice (paddy) production. Since the basic problem is capacity and efficiency of the core production facilities, price incentives for paddy farming would not be sufficient to reserves the decelerating rice production trend.

Two recommendations are given for those problems. First, reliable and update data is needed. Therefore, BPS should be autonomy in budget support and do the consistent periodical survey for estimation of key production parameters. Second, present policies should be reconstructed in terms of direction, location, strategy, and framework. In terms of direction, from paddy production growth to rice production growth and efficiency. In terms of location, from developed (Java, Sumatra, Sulawesi) to newly developed (Kalimantan, Papua) production centers. In terms of strategy, from provision of paddy farming incentives to facilitation for production capacity and efficiency enhancement of key industry segments. In terms of framework, from piece meal, reactionary, short-term to integrated, large scale, and long-term blue print. (PK)