Implementation of Import and Export Deregulation Policy to Improve National Food Security and Creating Farmer Welfare

Abstract

This study examines the crucial intersection of economic policy, agricultural sustainability, and social equity by analyzing the implementation of export and import deregulation policies in Indonesia. Utilizing a robust quantitative methodology, this research evaluates how the relaxation of trade barriers impacts national food security indices and the overall welfare of smallholder farmers, traditionally measured through the Farmer's Terms of Trade (Farmer Exchange Rate or NTP). Data were collected from a purposive sample of 250 agricultural stakeholders, including cooperative managers, local food distributors, and farmer group leaders across major agricultural regions. Structural Equation Modeling (SEM) was employed to analyze the complex causal relationships between trade liberalization variables, domestic market price stability, and farmer income levels. The empirical results demonstrate that while import deregulation significantly stabilizes urban food prices and mitigates short-term supply shocks, it exerts a severe downward pressure on domestic farm-gate prices, thereby threatening rural livelihoods. Conversely, export deregulation provides substantial revenue opportunities, but its benefits are overwhelmingly captured by large-scale agribusinesses rather than independent smallholders who lack international supply chain integration. The structural model underscores that trade deregulation alone is insufficient to guarantee equitable outcomes; it requires a symbiotic implementation of domestic price floors, localized agricultural subsidies, and infrastructure support to bridge the capacity gap. Ultimately, this study concludes that a balanced, protective regulatory framework must complement trade liberalization to ensure that macroeconomic food security strategies do not inadvertently undermine the socioeconomic welfare of the nation's foundational food producers