Determination of Food Price Increase in Indonesia: RICE, FOOD,

SOY Period 2007 - 2017

Elpina Idola Malau

Post Graduated of Economic Universitas Negeri Medan

Keywords: High food price, Inflation specific, Macroeconomic

Abstract: The purpose of study to analyze the effect of broad money (m2), narrow money (m1), exchange rate,

amount of rice and soybean production, rainfall and the maximum temperature on the high food prices in

Indonesia for the period 2007-2017. The study used multiple linear regressions, to examine the study

hypothesis. The empirical analysis show that broad money (m2) narrow money (m1), amount of rice and

soybean production, rainfall and the maximum temperature significant and positively affects on the high

food prices in Indonesia and exchange rate significant and negative affected on the high food prices in

Indonesia, particularly rice and soybean. This study also found that narrow money (m1) had the most

dominant influence on high food price in Indonesia. caused look at the society of velocity of money fast,

that is trough economy and business transaction, that impact on the high food prices in Indonesia.

1 INTRODUCTION

The issue of rising food prices is one of the severe

problems that Indonesia always experiences every

year, this is very burdensome, especially for middle-

income and lower income communities, starting

with the rising prices of foodstuffs such as rice,

soybeans, corn, and other foodstuffs. already and

almost reached 100% increase.

Hariharan and Kumar (2012) state that the

increase in food prices is caused by several factors,

namely a shift in population and a shift in habits to

food consumption, an increase in fertilizer prices, an

increase in fuel prices which are key to

transportation of agricultural commodities

(distribution, production, food commodities),

demand-side pressures, natural factors such as

rainfall, hurricanes, floods, droughts, pests and

diseases, resulted in a decline in agricultural

productivity, which led to an increase in food prices.

Looking at the form of consumption patterns of

the Indonesian people, average public expenditure

on food each year ranges from more than 50%,

meaning that public expenditures are very high, the

high form of expenditure (demand) that is not

balanced with the offer will cause a problem that is

scarcity which ultimately results in an increase in

food prices. One of the factors underlying the high

level of consumption patterns (public expenditure) is

the amount of money circulating, Irvin Fisher (1987)

states that with the increasing level of circulation of

money will have an impact on the increasing form of

consumption patterns of the community.

Source: The central statistics agency (in though,

2017)

Figure 1: Indicators of Indonesian Community

Expenditure on food and the amount of rice and

soybean production in the last eleven years

The annual inequality between public

expenditure and the amount of food production

which will later reflect supply, this will directly

Malau, E.

Determination of Food Price Increase in Indonesia: RICE, FOOD, SOY Period 2007 - 2017.

DOI: 10.5220/0009509108510859

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 851-859

ISBN: 978-989-758-432-9

851

cause problems in macro and micro, these problems

include not fulfilling the demand for food needed by

the community, the increasing form of imports made

will be at risk of being negatively affected by the

international economy due to the depreciation of the

rupiah exchange rate which has made the price of

imported food to rise and has an impact on

fluctuations (changes) in local food prices, and will

not achieve equilibrium conditions for the economy,

because every year there is always an imbalance

between supply and demand this ultimately led to an

increase in food prices and a negative impact on the

country's economy.

Source: BPS (2007 – 2017), processed.

Figure 2: Graph of percentage increase in food

prices (panangan rice, soybean, corn and other

whole food ingredients)

Besides the influence of weather is also very

influential on rising food prices, Lazzaroni (2012)

states that weather changes have an impact on

economic activities in various sectors, but the

agricultural sector becomes the most influential,

because the agricultural sector has the most vital

relationship with the weather, due to growing food

growth in addition to being supported by care and

fertilizer, it must be supported by normal weather

conditions, besides the smoothness of the form of

food distribution is also determined by the weather.

In view of the increase in food prices in

Indonesia every year, an evaluation of the problems

that have been drawn based on reality and existing

data is about increasing food prices, it is important

to note and furthermore, an analysis of important

food price increases, as for factors which affects the

increase in food prices including the amount of

money in circulation (m2) and narrow (m1), the rate

of exchange (exchange rate), the amount of food

production of rice and soybeans, weather (rainfall

and maximum temperature). The variable variable is

the parts that most influence the increase in food

prices in Indonesia, this study aims to analyze the

effect of rising food prices in Indonesia especially in

rice and soybean foods.

2 LITERATURE REVIEW

Food Definition

Food is a commodity that is a basic human need for

food does not mean economically strategic, but also

means as a form of community needs, which is

categorized as food generally contains carbohydrates

which function as main calories, and can be used for

other needs such as processed raw materials based

on the benefits obtained to produce the needs

needed, which are included to. foodstuffs such as

grains, tubers and stems of palms, soybeans, maize

and non-carbohydrate foods such as onions, red chili

which is the biggest need which is very important

for most of the population (Hasan, 1998).

Increase in Food Prices

The increase in food prices can be interpreted as an

increase in the price of one or more food

commodities, these food commodities consist of

rice, corn, soybeans, green beans, peanuts, sweet

potatoes, cassava, chili and onions. The price

increase is called volatile good (the tendency of

changes in the value of goods), an increase in food

prices is one of them based on factors increasing

demand for food that is not balanced with food

productivity (Central statistical agency, 2013).

The factors that cause increases in food prices

according to Hariharan and Kumar (2012) are:

1. Continued increase in population and shifting

habits of food consumption.

2. The increase in prices of other inputs such as

fertilizers, seeds, etc. in recent times has caused

inflation.

3. Continuous increase in fuel prices, which is a

key input for transportation of commodity

agriculture for central processing or

consumption, so, prices Crude oil affects input

costs and causes inflation to a large extent.

4. Natural factors such as rainfall, hurricanes,

floods, droughts, pests and diseases result in

decreased production and productivity of

agricultural production in many countries

5. Increasing people's purchasing power is one of

the main factors of inflation.

6. The increase in minimum support for food prices

has caused inflation.

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Money supply and rising food prices

In the quantity theory of money explained because

the emergence of price increases is due to the

excessive form of demand caused by changes in the

money supply (Nopirin, 2000), according to Irving

fisher, the effect of the money supply on price

changes is formulated through MV = PT, namely M

(money) = money supply, V (Velocity) = velocity of

money circulation, P (Price) = price of goods, T

(Trade) = Number of goods traded, according to

Fisher the price of goods is influenced by the money

supply due to purchasing power owned by the

community it causes high consumption power

owned by the community so that the consumption

cycle owned by the community stimulates the flow

of goods from producers to consumers. And

according to Mankiw (2003) that the relationship

between the money supply and the price increase

cannot be done if it is only seen in the short term,

but it must be seen in the long term in order to get

good results and significant results. the relationship

between the money supply and the price increase

cannot be seen in the short term, therefore in

explaining the relationship between the increase in

prices and the money supply it will not be as tight as

if it was seen over a ten year period friedman and

Schwartz (1987).

Exchange Rate (Exchange Rate) and Increase in

Food Prices

According to Cassel (1918) the exchange rate

between the two countries should be equal to the

price level of the country's ratio, the fall in the form

of domestic purchasing power of a domestic

currency will directly be followed by a depreciation

in the country's currency against domestic money

market but if it happens otherwise the domestic

purchasing power becomes increased it will cause

deflation which is directly followed by a form of

appreciation in the currency, this theory is the theory

that is most often tested for validity because there is

a form of comparison that sees the form of power

capability buy high which causes inflation / price

increases (Cassel, 1918). According to Bob (2002)

Purchasing Power Parity Theory is a theory that

states that the exchange rate between money tends to

lead to an equilibrium condition, purchasing power

should be a society equivalent to the purchasing

power of people in other countries. The occurrence

of price increases, can be seen through the decline in

the exchange rate of the rupiah against the value of

foreign currencies because the depreciation of the

exchange rate will cause an increase in the price of

imported goods, this directly affects the fluctuations

in domestic prices.

Total Food Production (rice and soybeans) and

Increase in Food Prices

The reduced availability of food will have an impact

on the reduction in basic needs needed by the

community, this will lead to a form of food crisis,

food availability involves three aspects, namely

production, distribution, consumption, food

availability supported by actors such as producers,

processors (suryanan, 2004 ) The form of imbalance

between the amount of production (reflection of

supply) and demand will cause changes in the value

of elasticity, as well as the result of demand and

supply that will cause price fluctuations (Nicholson,

2000). The form of production, trade and

consumption of food will affect fluctuations in food

prices (changes in food prices) due to forms of

processing that require costs and forms of demand

and supply that make food prices rise and fall,

therefore maintaining stability will cause a price

balance ( Ellis, 1992).

Weather (rainfall and maximum temperature)

and increase in Food Price Increase

According to Gilbert and Morgan (2010, in Alisher

and Daniel 2012) Weather change is considered as

one source of variability in the prices of agricultural

commodities. Trovero and Von Braun (2008 in

Lazzorini 2012) mention weather changes can cause

a form of potential, such as floods, droughts which

ultimately damage food crops and hamper the form

of food distribution, which in turn has an impact on

rising prices of food commodities Trovero and Von

Braun (2008 in lazzorini 2012 According to

Banumurty, PamiDua and Lokendra (2012) the

impact of weather is very influential on

macroeconomic policies because weather is a

fundamental factor that affects the positive and

negative significance of the results of the

agricultural sector, and the impact of climate change

directly has a very negative impact on price

increases and production growth food. food price

increases can be caused by weather because the

weather influences the shape of the crop, and the

form of crop failure, besides the weather also causes

disruption of the form of distribution patterns such

as the occurrence of landslides causing obstruction

of the distribution, resulting in scarcity of food

commodities in the end it caused a tendency to

increase food prices, due to problems in the form of

distribution patterns

Previous research

Previous research was conducted by Salman and

Adnan 2013, which is about the Determinants of

High Food Prices of the Case of Pakistan wherein

this research examines the factors that cause food

price increases in Pakistan, which are seen through

Determination of Food Price Increase in Indonesia: RICE, FOOD, SOY Period 2007 - 2017

853

the consumer price index, GDP, and agricultural

sector loans. The results of this study explain that

the variables that become the object of research, one

of which is the agricultural sector credit has the most

significant influence among other variables on

changes and increases in food prices, seen through

the method of autoregresive distributed lag analysis

by comparing the total value of the past agricultural

credit sector and value the present as a result, credit

obtained from the agricultural sector has a

significant effect on changes and the occurrence of

food inflation

Previous research was carried out by Aviral

Kumar 2010, which discusses the Impact of Supply

of Money on Food Prices in India: A Causality

Analysis, in this study using Vector error correction

model (VECM) analysis method to determine the

causality between variables, variables that used in

this study is the money supply in area (M2) and the

money supply in narrow measure (M1). the results

of this study explain that the size of the money

supply in a narrow measure (M1) significantly

causes food inflation while the broad amount of

money supply does not affect food inflation because

in the analysis framework it is found that changes in

the money supply are wide (M2) it will only have a

significant impact on food inflation in just three

years.

The next study was conducted by Alisher and

Daniel 2012, in his discussion discussing Effects of

weather shocks on agricultural commodity prices in

Central Asia, in this study using the Feasible

Generalized Least Squares (FGLS) analysis of panel

regression, this study uses several variables

consisting of price local local wheat and prices of

fried potatoes, global wheat prices and global potato

prices, exchange rates, inflation rates, water

irrigation, weather changes, potato stocks. wheat

stock, the amount of wheat and potato production,

The results of this study show that weather changes

and water availability have a significant effect on the

prices of wheat and potatoes in central Asia, whereas

in potato commodities the effect is more apparent in

the amount of yield obtained from potato

production.

Ficture 3: Mindset

3 RESEARCH METHOD

In this study using several determinants in

assessing the form of increase in food prices is

the amount of money that varies widely (m2) and

narrow (m1), the exchange rate, the amount of

rice and soybean food production, rainfall, and

maximum temperature. All observations of the

data amounted to 132 observations. To analyze

the effect of factors increasing food prices,

multiple linear regression was used and using the

classic assumption test it aims to determine the

effect of independent variables on dependent.

The time period in this study was from 2007-

2017

The regression equation is described as

follows:

Y = β0 + β1 X1 + β2 X2 + β3 X3 + β4 X4+ et.

Information :

Y = Increase in food prices (food inflation)

β0 = Constants

β1, β2 = Regression Coefficient

X1 and X2 = The money supply area of M2 and

the money supply is narrow (M1)

X3 = Exchange rate

X4 and X5 = Amount of rice production and total

soybean production

X6 and X7 = Rainfall and Maximum

Temperature (Rainy and hot weather)

Det = error

Data source

The data used in this study was obtained online or

through official institutions / agencies. Data from the

determinants of rising food prices were obtained

from the Central Statistics Agency Bank.

Meteorology Climatology and Geophysics Council.

In addition, data also used from journals, books,

articles, and other relevant sources used in this

study.

4 RESULT

For estimation of multiple linear regression in this

study, the aim is to find out whether the independent

variable has a positive or negative influence and is

significant to the increase in food prices in

Indonesia, these results are shown by the form of

coefficients (positive) and probability values < 0.05

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to find out the results have a significant effect or not,

and see the results of the R2 value which shows how

much influence the independent variable on the

dependent variable, these results are obtained based

on the following results:

Table 1: Results of multiple linear regression

Dependent

Variable:Y

Variable Coefficient Std.Error t-Statistic Prob

C -97.21513 8.355733 -11.63454 0.0000

X1 1.380341 0.596226 2.315132 0.0222

X2 5.126113 0.546585 9.378443 0.0000

X3 -0.778071 0.250492 -3.106167 0.0023

X4 3.964014 1.141838 3.471609 0.0007

X5 4.080209 1.152318 3.540870 0.0006

X6 4.118688 1.405513 2.930380 0.0040

X7 0.050615 0.023266 2.175481 0.0315

R-square:

0.931469

F statistic: 240.7703

Observasion: 132 Prob (F statistic): 0,0000

Source:Data processed Eviews 7, 2014

The coefficient of determination (R-Squared)

shows a number of 0.931469, meaning that the

variable money supply area (m2) and narrow (m1),

exchange rate (exchange rate), amount of food

production of rice, soybean, rainfall and maximum

temperature can explain 93% variable variation in

food price increases in Indonesia, while the rest

(7%) can be explained by other variables outside the

model. The F-test of 0.00000 indicates that the

variable amount of food production of rice,

soybeans, rainfall and maximum temperature has a

significant effect on the variable increase in food

prices in Indonesia. In the t test, the value> t table is

1.979 which means that the t statistic is fulfilled and

looking at the probability value of the seven

variables has a carry value of 0.05 meaning that the

variable has a significant influence on the Y

variable, it can be concluded from 7 independent

variables tested, has a spositive and significant

influence on the increase in food prices in Indonesia.

After regression analysis on all variables, both

the dependent and independent variables, from the

estimation results that have been obtained, it is

necessary to do a classic assumption test. Tests to

find out whether the estimation model has fulfilled

the form of criteria in econometrics means that there

are not enough forms of errors based on assumptions

that must be fulfilled in the Ordinary Least Square

(OLS) method. The result of a good estimate is

regression that has met Blue criteria (best linear

Unbiased Estimator) (Gujarati, 2002).

Table 2: Normality Test

Statistic test Sig value Information

Kolmogorov-

Smirnov Z 0,431

ormal sprea

Based on the results of normality testing in the

table above, it is known that the residual regression

significance value formed is greater than the 5% real

level so that it can be said that the assumption of

normality is fulfilled.

Table 3: Assumption of Normality

Independent

Variabel Sig. Information

X1 0,298 Homoskedastisitas

X2 0,363 Homoskedastisitas

X3 0,823 Homoskedastisitas

X4 0,947 Homoskedastisitas

X5 0,458 Homoskedastisitas

X6 0,909 Homoskedastisitas

X7 0,232 Homoskedastisitas

Based on the table above, it is known that the sig

value. > 0.05, it can be concluded that there is

homoskedasticity or in other words the assumption

that heteroscedasticity does not occur has been

fulfilled statistically.

Table 4: Multicolenearrity test (Variance Inflating

Factor VIF)

Mode

Collinearity

Statistics

Tolerance VIF

1 (Constant)

X1 ,175 5,708

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X2 ,157 6,370

X3 ,730 1,370

X4 ,562 1,779

X5 ,483 2,071

X6 ,354 2,828

X7 ,282 3,552

Based on the table above, it can be seen that the

independent variables in this study have a Variance

Inflation Factor smaller than 10, so that it can be

said that there are no symptoms of multicollinearity

between the independent variables in this study.

Du 4-du

4-dl

Interpretation

1,60

1,82

2,17

2,3

1,93

not occur

Autocorrelation

5 DISCUSSION

In general, the regression model used in this study

has a good outcome. Free Vaiabel is used, namely

the money supply area (m1) and narrow (m2), the

exchange rate (exchange rate), the amount of food

production of rice, soybeans, rainfall and maximum

temperature can

Explain the effect on the increase in food

prices with ahigh percentage ( 93% ), Together

these variables have a significant effect on the

increase in food prices in Indonesia. Individual

influences can be explained as follows:

Variablewide money supply (M2) has a

Significant influence on rising food prices, the

results of the coefficients obtained in this variable

are positive, this indicates, that the existence of a

positive direction means that an increase in the

money supply will affect the increase in food prices.

The value of the regression coefficient obtained is

1.380341 it shows, if there is a form of increase

experienced by the money supply of 1% or one unit

directly causing an increase in food prices by 1.38%

with the form of asusmi other variables remain and

there is no change. The results obtained based on

this regression analysis are in accordance with the

theory put forward by Irvin Fisher who explained

that the higher level of money circulation would lead

to the high purchasing power of the community. And

the results obtained are also the same as stated by

Nophirin, according to him in the theory of money

complexity that because of the rise in price, the

excess form of demand owned by the community is

a form of high demand due to the money supply.

Narrow money supply (M1)

Based on the results of the t test, the results show

that the variable money supply narrow M1 has the

most dominant, significant and positive influence on

the increase in food prices, the result of which the

coefficient obtained is positive, this indicates that

there is a positive direction affect the increase in

food prices and vice versa. The coefficient of the

narrow money supply variable is 5.126113, it shows

that there is an increase in the money supply

amounting to 1% which will cause an increase in

food prices which is equal to 5.12%, with the form

of other variables remaining fixed or no changes to

other variables (constant). The results of the analysis

obtained are in accordance with the theoretical form

proposed by Mankiw (2000) that a high price

increase will occur if the existence of a high level of

circulation in the amount of money circulating

directly will cause a boost in public consumption.

The increase in money distribution both narrowly

and broadly will cause a high form of public

consumption power, based on the manki theory, an

increase in the money supply causes a form of

positive increase in consumption which will

gradually lead to increases in food prices (Mankiw,

2000)

From the results of the t test that has been done,

it is found that the variable rate of exchange /

exchange rate has a significant influence on the

increase in food prices (food inflation) Indonesia.

The coefficient obtained in this variable is negative,

meaning that the increase experienced by the

exchange rate / exchange rate causes a decrease in

the increase in food prices, and vice versa the

occurrence of depreciation (decline) by the exchange

rate will cause an increase in food prices. The

regression coefficient obtained is - 0.7787071,

which shows that the increase in the rate of

exchange / value of 1% will cause a decrease in the

increase in food prices by -0.77% with the

assumption that there is no change in other variables

(constant variable) . The results of the analysis

obtained in accordance with the form of theory put

forward by Cassel (1918) the exchange rate between

the two countries should be equal to the price level

of the country's ratio, the fall in the form of domestic

purchasing power of a domestic currency will

directly (increase the inflation rate) followed by

deperesiasi form on the country's currency against

the domestic money market but if it happens

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

856

otherwise domestic purchasing power becomes

increased it will cause deflation which is directly

followed by a form of appreciation in the currency,

this theory is the theory that is most often tested for

validity is because there is a form of comparison that

looks at the form of high purchasing power that

causes inflation / price increases. The same thing

was stated by Bob (2002) The occurrence of price

increases, can be seen through the decline in the

rupiah exchange rate against the value of foreign

currencies because the depreciation of the exchange

rate will cause an increase in the price of imported

goods, this directly affects domestic price

fluctuations.

Amount of Rice Production

Based on the results of the t test, it was found that

the rice production variable had a significant effect

on the increase in food prices in Indonesia. The

coefficient of the rice production variable obtained is

positive, which means that a decrease in the form of

rice production will cause an increase in food prices

and conversely the positive increase in the form of

rice production will suppress the form of rising food

prices. The value obtained from the regression

coefficient of rice production is equal to 3.964014,

which shows that the increase in rice production

which is equal to 1% will cause an increase in food

price increases of 3.96% with the assumption that

there is no change in other variables (constant

variable) . The results of the analysis above show

that the results are in accordance with the theory

explained by Ellis (1992) that the forms of

production, trade and consumption of food will

affect the fluctuations in the price of goods.

Soybean Production Amount

Based on the results of the t test, the results show

that the variable amount of soybean production has a

significant effect on the increase in food prices. The

coefficient value of the rice production variable

obtained is positive, this indicates that if a decrease

in soybean production will cause an increase in food

prices and vice versa if the increase towards the

positive towards soybean production will cause a

decrease in the increase in food prices. Regression

coefficient value of soybean production obtained is

equal to 4.080209. The results show that the increase

that occurs in soybean production which is equal to

1% will cause an increase in the increase in food

prices by 4.08% assuming no changes occur by other

variables (all variables are constant) . The results of

the analysis obtained show that the results are in

accordance with the theory put forward by Ellis

(1992) that the forms of production, trade and

consumption of food will affect the fluctuations in

the price of goods and according to Suryana (2004)

explain that the form of food supply involves three

aspects, namely distribution , consumption,

availability that is supported by actors who have

interests such as producers,

Rainfall

Based on the results of the t test, it was found that

the rainfall variable had a significant effect on the

increase in food prices. The coefficient of rainfall

variables is positive, these results show that positive

increases that occur in rainfall will cause an increase

in food prices, so the decrease in rainfall will cause a

decrease in the increase in food prices. The bulk

regression coefficient huja is equal to 4.118688, the

results show that the increase that occurred at 1%

will cause an increase in the increase in food prices

by 4.11% with the assumption that other variables

are constant without change. The results of the

analysis obtained in accordance with the relevant

theory put forward by Gilbert and Morgan (2010)

according to him weather changes are considered as

one source of variability in the prices of agricultural

commodities. The same thing was stated by Trovero

and Braun (2008) that changes in weather can cause

a form of potential, such as floods, droughts which

ultimately damage food crops and hamper the form

of food distribution, which in turn has an impact on

rising prices of food commodities (Trovero and Von

Braun, 2008

Maximum Temperature (Hot Weather)

Based on the results of the t test, the results show

that the maximum temperature variable has a

significant effect on the increase in food prices. The

coefficient value of the rainfall variable is positive.

This result shows that the occurrence of a positive

increase in maximum temperature causes an increase

in food prices and conversely the decrease in

maximum temperature will cause a decrease in the

increase in food prices. The maximum temperature

regression coefficient value is 0.050615, the results

show that an increase in the number of 1% will

cause an increase in food prices by 0.05%, this

applies with the assumption that other variables are

constant and do not change.

After performing various tests both on the

questionnaire and on the variables; it turns out that

this research deserves to be continued by multiple

linear analysis. In multiple linear regression test to

four independent variable of reliability, competence,

credibility and communication have influence to

Determination of Food Price Increase in Indonesia: RICE, FOOD, SOY Period 2007 - 2017

857

employee job satisfaction. The effect of these four

variables varies greatly. Reliability has the greatest

influence; followed by communication, then

credibility and competence. The four variables gave

effect of 61.0%, meaning 39.0% influence on

satisfaction contributed by other variables not

included in this research model.Similarly, the

correlation of each independent variable with

satisfaction indicates that the most dominant and

strongest positive correlation is between the variable

of reliability and job satisfaction, followed by

communication variables with job satisfaction,

competence with job satisfaction and lastly between

credibility and jobsatisfaction.

In hypothesis test by simultaneous test method (F

Test) also called ANOVA, it turns out sig value

alpha 0.000 < alpha 5% (0.05). The value of f

arithmetic is also greater than f table. This means

that four variables together will have a positive and

significant impact on jobsatisfaction.In the Partial

Test (Test T), it is found that the variable reliability

and communication significantly affect job

satisfaction, but the credibility and competence

variables do not significantly affect job satisfaction.

The variable of reliability in the performance

appraisal system gives a significant influence in

affecting job satisfaction, which means satisfaction

and job dissatisfaction of employees influenced by

variable reliability.

Based on the background of research that the

performance appraisal system has not been able to

provide job satisfaction, so the variable reliability is

one factor in the performance appraisal system that

has not been able to provide job satisfaction. This

can be explained through several things, employees

feel reward or punishment miss promotion

promotion, increase salary levels are often not based

on performance appraisal results; so that employees

feel the performance appraisal is not done or

executed as promised. Or the company is often late

in doing performance appraisal which will then slow

down the promotion process or a raise.

Communication variables also gained a

significant influence in affecting job satisfaction,

which means communication in the performance

appraisal system is one factor that has not been able

to provide job satisfaction. This can be explained by

several things; the company has not really explained

well the performance appraisal system. The

company also rarely discusses the

employee'sappraisal system that has not been able to

provide job satisfaction. This can be explained

through several things, employees feel reward or

punishment miss promotion promotion, increase

salary levels are often not based on performance

appraisal results; so that employees feel the

performance appraisal is not done or executed as

promised. Or the company is often late in doing

performance appraisal which will then slow down

the promotion process or a raise.

Communication variables also gained a

significant influence in affecting job satisfaction,

which means communication in the performance

appraisal system is one factor that has not been able

to provide job satisfaction. This can be explained by

several things; the company has not really explained

well the performance appraisal system. The

company also rarely discusses the employee's next

performance plan after the performance appraisal.

Employees expect performance planning together

with the company. Competence variables, although

partially ineffective in affecting job satisfaction but

together with other variables have an influence on

satisfaction. Officers who carry out assessment in

the eyes of employees is quite strong and skilled and

have sufficient knowledge; but it is not a major

factor that gives a sense of satisfaction. Credibility

variables are also partially ineffective in influencing

job satisfaction, but together with other variables

have an influence on satisfaction. The courteous,

honest and respectful examiner is the capital to be an

appraiser that pleases employees; but it is not

enough if it does not get a reliable and well-

understood performance appraisal system.

6 CONCLUSIONS

Based on the explanation of the problems,

hypotheses, discussion and analysis results in the

previous chapter, it can be concluded that the

variable money supply, the rate of exchange, the

amount of food production, the weather has a

positive and significant effect on the increase in food

prices in Indonesia.

1. The form of increasing the money supply,

besides being influenced by currency held by

the public is also influenced by credit, because

easily the form of credit or loans obtained

directly will cause many people to do a form of

credit or loan which in the end, easily obtained

and the amount of funds obtained will directly

increase people's consumption patterns, this is

the same as the theory proposed by Irvin Fisher

regarding the effect of the money supply on

price increases, therefore the most the basis of

influencing the increase in the money supply is

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

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the community and the process of credit

facilitated by the bank so that there is a

tendency for people to make loans so as to

increase the form of business activity and the

economy of the community.

2. The occurrence of depreciation (rate of decline)

on the rate of exchange (exchange rate) can be

seen from the form of imports of some food

commodities that Indonesia does every year,

due to the form of structural inequality, namely

the productivity gap associated with weak asset

allocation and production factors, and forms of

dependence on foreign debt which has a

negative impact on the economy (the impact of

business people who often engage in foreign

exchange) and the equilibrium trap phenomenon

(trap imbalance) related to the structure between

the three production sectors that underlies the

economic crisis which ultimately impacts

depreciation of the exchange rate (exchange

rate) which ultimately causes an increase in

prices of imported goods, the amount of food

production that is not matched by demand and

the demand for imported food every year,

without increasing production facing domestic

food commodities eventually led to an increase

in prices, especially imported food, due to the

depreciation of the exchange rate (declining

exchange rate) against foreign currencies.

The problem of rising food prices caused by

weather, because the weather influences the

growth and development of food crops, for

example, such as rainfall, very high rainfall

causes the food crops to be inundated and

become damaged, which causes crop failure for

food crops so that with yields that are small and

high in demand cause an imbalance between

supply and demand so that in the end it will lead

to a tendency to increase prices, and looking at

hot weather (drought) can cause disruption to

plant growth due to hot weather affecting

drought to food crops so that it ultimately does

not the fulfillment of sufficient water for food

crops, this is the basis of the occurrence of crop

failure caused by hot weather, as well as an

explanation of rainfall, crop failure caused by

maximum temperature (cu aca heat) will cause a

reduced form of production to be obtained so

there will be an imbalance between demand and

supply which ultimately leads to an increase in

food prices.

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