Market Equilibrium Modelling of Rice in South Kalimantan Using the Nonlinear Programming Method: Implications for Agricultural Policy

Nuri Dewi YantiYudi Ferrianta

DOI 10.7160/aol.2026.180308
No 3/2026, September
pp. 103-121

Yanti, N. D. and Ferrianta, Y. (2026) "Market Equilibrium Modelling of Rice in South Kalimantan Using the Nonlinear Programming Method: Implications for Agricultural Policy", AGRIS on-line Papers in Economics and Informatics, Vol. 18, No. 3, pp. 103-121. ISSN 1804-1930 DOI 10.7160/aol.2026.180308.

Abstract

Despite being a top global producer, Indonesia’s rice market equilibrium is increasingly threatened by demographic pressure, land conversion, and a growing reliance on imports. This study develops a novel Computable General Equilibrium (CGE) model using General Algebraic Modelling Language (GAMS) and nonlinear programming to analyse how regional production responds to shifting policies and market dynamics. The research specifically focuses on South Kalimantan, a region that serves as a strategic food buffer for the new National Capital (IKN). The model demonstrates strong empirical reliability, with a price calibration deviation of only 1.8% and an overall production error of just -0.7%. Simulation results reveal that while overproduction creates regional surpluses, it does not necessarily lead to lower consumer prices. Conversely, government-imposed price controls were found to trigger significant supply deficits by disincentivising producer output. These findings confirm the model’s utility as a robust tool for evaluating productivity, infrastructure, and stabilisation policies to ensure national food security.

Keywords

CGE-SAM model, GAMS, rice market equilibrium, South Kalimantan, food security, price control.

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