Exchange Rate For Rice Farming Households In Lampung Province

Lidya Sari Mas Indah1, Bustanul Arifin1, Ambya2

1Agribusiness, Faculty of Agriculture, University of Lampung
2Faculty of Economics, University of Lampung
JL Sumantri Brojonegoro I, Gedong Meneng, Kec. Rajabasa, Bandar Lampung City, Indonesia
e-mail: lidya.sari17@fp.unila.ac.id 

ABSTRACT

The Household Farmer's Exchange Rate (NTPRP) is an indicator of farmer welfare in Indonesia. Farmers' purchasing power can be predicted through the NTPRP (Exchange Rate of Farmer Household Income). The problem faced by farmers is low income, caused by farmers' expenditures on production inputs not being commensurate with their farm income. Furthermore, low incomes mean that farmers' purchasing power for household consumption is insufficient to meet their basic needs.
The purpose of this study is to analyze the income of farmer households, the level of farmer welfare with the exchange rate of food farmer households (NTPRP) and the determinants of farmer welfare. This study used a survey, with a total of 168 rice farmers in Lampung Province who were selected by random sampling. The location was chosen purposively, namely Lampung Province as one of the fifth largest rice producers in Indonesia. The research was conducted in September - December 2025. This study used an analysis of farmer household income, cost analysis, and binary logit analysis . The results showed that farmer household income derived from rice on-farm contributed significantly to farmer household income, the level of welfare based on the exchange rate of farmer households (NTRTP) of farmers in a less prosperous condition. The determinants of farmer welfare showed that rice farming income, off-farm income were positive and significant to farmer welfare while food consumption expenditure was negative and significantly affected the welfare of rice farmer households in Lampung Province. The results of this study recommend that farmers need to diversify their income with the support of the agro-industry in rural areas, ease of access to modern technology, and the government needs to provide superior seeds, fertilizers, mini-mechanization, and sustainable intensification through farmer development and institutions.

Keywords: welfare, exchange rate, household, farmers, rice

1.         INTRODUCTION
Economic growth is an important instrument for improving welfare and alleviating poverty (Balasubramanian et al., 2023; Aneela Qadir et al., 2022). The relationship between rural poverty and welfare outcomes is a significant social issue, as poor areas face challenges such as low incomes, nutritional imbalances, and inadequate policy regulations. (Peng et al., 2023) .
In Indonesia, farmer welfare is measured using the Farmer Exchange Rate (NTP). The Farmer Exchange Rate (NTP) is a comparison of the price index received by farmers to the price index paid by farmers. This exchange rate is one indicator of the level of ability/purchasing power of farmers in rural areas. The NTP also shows the exchange rate ( terms of trade ) of agricultural products for goods and services consumed, as well as for production costs. The higher the NTP, the relatively stronger the level of ability/purchasing power of farmers. Over the past five years, the farmer exchange rate in Lampung Province, especially in the food crop subsector, has remained below 100, meaning that the price paid by farmers for agricultural products is still much higher than what they receive. The development of the NTP in Indonesia can be seen in Figure 1 below:

Figure 1. Farmer's Exchange Rate (NTP) in Indonesia 2022 – 2024
Source: BPS Indonesia, 2024

In Figure 1, in 2024, the highest NTP was achieved in the plantation subsector, namely 1.49, and the lowest NTP was in the livestock subsector, namely 102.48. Meanwhile, in 2024, the food crop subsector experienced an increase, namely 110.45. The food crop subsector is the most fundamental thing in meeting food needs in Indonesia. Food availability must receive more attention from the government, especially since food is a basic need for all Indonesian people. The prediction of a food crisis expressed by economists will disrupt the logistics system, so that breakthroughs are needed so that the future food system is more comprehensive and sustainable through production, processing, distribution, trade, and food consumption activities. The sustainability of the food system will impact the welfare of farmers (Arifin, 2022). The traditional agricultural sector has helped ensure food security for a growing population. However, the biggest obstacles faced by farmers are low yields and high production costs, one of which is due to inflation . Inflation at the producer level, measured by the producer price index (PPI), is much higher than inflation at the consumer level (CPI) (Arifin, 2022a) . Inflation and rising food prices will threaten farmers' livelihoods by increasing the cost of consumer goods (Kuma & Gata, 2023; Lastri, WA, & Anis, 2020) . This condition results in low farmer incomes and poor welfare (Marsudi et al., 2020; Pangesti, 2021; Saridewi, 2021).
One of the strategic food crops that is crucial to the national economy is rice. Rice is a strategic commodity in Indonesia due to its crucial role in food security, economics, and politics. Rice is viewed as a political commodity whose price stability must be maintained through the role of state institutions such as BULOG (Mariyono, 2014; Ruspayandi et al., 2022). In fact, rice has been shown to behave like a Giffen good, reflecting its nature as a household staple (Hamzah & Huang, 2023). On the other hand, challenges in rice seed production and distribution indicate that institutional support and improvements to the distribution system are essential to ensure the sustainability of rice as a strategic commodity. (Abdul Qadir et al., 2024) . Indonesia's rice production in 2019 reached 54,604,033.34 tons (BPS, 2022). However, in 2024, the harvested area and rice production experienced a significant decline. The rice harvested area in 2024 was 10.05 million hectares, down to 167.57 thousand hectares, or 1.64 percent compared to the rice harvested area in 2023. Rice production in 2024 was 53.14 million tons of dry grain (GKG), a decrease of 838.27 thousand tons, or 1.55 percent compared to  2023 rice production of 53.98 million tons of dry grain (GKG).
Lampung Province ranks 6th out of 34 provinces in Indonesia, with 2,791,347.53 tons of GKG (Dry Milled Grain) on a harvest area of 1,678,479.21 hectares. Rice production in Central Lampung, South Lampung, East Lampung , Tanggamus and Pesawaran regencies ranks among the 5 largest productions in Lampung Province (BPS Lampung Province, 2024 ). Although rice production in Lampung Province is high, the NTP of the food crop sub-sector is still low. Farmer Exchange Rate and household consumption expenditure are interrelated. If the NTP is low, farmers' purchasing power will be low, both purchasing power for food consumption and purchasing power for non-food consumption. The lowest NTP in Lampung Province occurred in the food crops subsector at 95.56 in 2020. The low NTP indicates that food crop farmers are currently in a state of poverty . The low Farmer Price Index (NTP) is due to the lower Farmer Price Index (It) compared to the Farmer Price Index (Ib) (BPS Lampung Province, 2021). Research related to the NTP includes Koylal et al., 2022, which states that the NTP is significant in reducing rural poverty levels but is not very effective if not accompanied by equitable income distribution. The small effect of improving farmer welfare on rural poverty may be due to the NTP variable used being insufficient to describe farmer welfare. Further research (Runtunuwu, 2020;Ramadhanu et al., 2021) shows that the producer price of paddy and inflation variables have a positive influence on the farmer 's exchange rate , while the wage variable has a negative influence on the farmer's exchange rate . In line with the research results (Indah, LSM ; Zakaria, WA; Sari, 2023) the factors of inflation, labor, GRDP, and interest rates have a significant influence on the Farmer Exchange Rate in Lampung Province. An NTP below 1 indicates widespread poverty in rural areas, with a majority of households relying on agriculture with limited land. In addition to the NTP, another measure of farmer welfare is the Rice Farmer Household Income Exchange Rate (NTPRP).
NRPRP is an indicator that reflects the economic welfare of rice farming households through a comparison between income received from agricultural production with their expenditures for consumption and production needs. If this exchange rate is above 100, then farmers are prosperous. Conversely, the NTPRP value below 100 indicates that farmers are not prosperous. This indicates that farmers' income is insufficient to cover consumption and production needs, which means their economic conditions are less favorable. Based on the above problems, it is important to analyze farmers' welfare comprehensively, that farmers' welfare does not only look at rice farming income but also looks at income outside of rice farming, namely on-farm income outside of rice, off-farm income and non-farm income . The purpose of this study is to analyze farmers' household income, the level of farmer welfare with the food farmer household exchange rate (NTPRP) and the determinants of farmer welfare.

2.     METHODS

The method used in this study was a survey. Primary data were obtained from primary sources, namely rice farmers, while secondary data were obtained from various sources, including BPS (Statistics Indonesia), the Food Security Agency, and other stakeholders. Respondents numbered 168 rice farmers, selected using random sampling . This study was conducted from September to December 2025. The analysis used farmer household income analysis, NTPRP analysis, and binary logit analysis.

Answering the first objective, namely by analyzing the income of farmer households, namely
Prt 		= Prt  onfarm paddy  + Prt non-rice onfarm  + Prt off-farm  +  Prt non-farm 
Information :
Prt 		= Household income of rice farmers
Prt onfarmpadi 	= Income derived from paddy farming
Prt non-rice on-farm 	= Income derived from farming businesses other than rice
Prtoff-farm 	= Income outside of rice farming
Prtnon-farm 	= Income outside the agricultural sector

To answer the second objective, namely the level of welfare of food farmers, we use the NTRTP welfare analysis. The formula for calculating the exchange rate of farmer household income is as follows (Yulian, Hilmanto, & Hewanti, 2016):

Information:
NTPRP 	= Exchange Rate of Farmer Household Income
Y 		= Farmer's household income (IDR)
E 	= farmer's household expenditure (IDR)
Y P 	= total income from farming (IDR)
Y NP 	= total income from non-agricultural farming (IDR)
EP 	= total expenditure for farming (IDR )	
EK 	= Total Expenditure for Non-Agricultural Businesses (IDR )	

So, the exchange rate of farmer household income is used as a benchmark for the level of welfare: NTPRP<1, means that the farmer's welfare level is not yet included in the prosperous group and NTPRP>1, means that the farmer's welfare level has entered the prosperous group.
Answering the third objective , namely the determinants of farmer welfare food in Lampung Province using binary logit analysis . This study  using ordinal logit considering that the dependent variable is ordinal data and has two categories (Erry Prasmatiwi et al., 2023; Molla et al., 2023; Nadeem et al., 2021; Ullah et al., 2022) .
The ordinal logit regression equation is as follows :

Pi = F ( Zi ) = F ( α + β 1 X 1 + β 2 X 2 + β 3​​ + β 7 X 7  + β 8 X 8  + β 9 X 9  + β 10 X 10   )
Where to find Zi, use the formula:
Zi = Ln [ ] = (α + β 1 LAPP + β 2 AGE + β 3 JART + β 4 LMPEND + β 5 PNGLMUT β 6 INCPD + β 7 INCOFF + β 8 INCNON + β 9 PGN + β 10 PNPGN
Where :
Pi 		= Farmer welfare criteria (NTRTP) 
Zi 	= prosperous farmers 1, not yet prosperous 0
α 		= intercept
βi 		= parameter regression coefficient (i= 1,2,3,….6)
LAPP 		= Outside rice harvest area (hectares)
AGE 		= Age (years)
JART 		= Number of household members (people)
LMPEND 	= Education (years)
PNGLMUT 	= Farming experience (years)
INCPD 	= Rice farming income (IDR)
INCOFF 	= Off-farm Income (IDR)
INCNON 	= Non-farm Income (IDR)
PGN 		= Food expenditure (IDR)
PNONpgn 	= Non-Food Expenditure (IDR)

3.     RESULTS AND DISCUSSION
3.1   Respondent Characteristics
Rice farmers in Tempuran Village, Central Lampung Regency, and Gunung Sugih Village, Pesawaran Regency, have a low level of education, ranging from elementary school to junior high school ( SMP), with an average productive age of 40 years. Education and productive age influence the performance of farmers' farms. Young farmers with good physical and health conditions will influence rice productivity (Hatta et al., 2023). The average rice farmer's farming experience is around 30 years. Longer farming experience will bring changes in the resilience of rice farming. This is in line with (Haile et al., 2025; Methamontri et al., 2022; Salam et al., 2024; Sedebo et al., 2021; Yeleliere et al., 2023), which show that farming experience has a significant impact on production and farm income. The rice respondents in the study had an average family of 3 to 4 dependents, a large number of dependents will affect the income and expenses of rice farming households. This is supported by research results (Gittins et al., 2025) large number of family members will help meet basic household needs because there are family members who work. In both villages, most of the side jobs of rice farmers are from off-farm as farm laborers. The land area in both villages is small land under 1 hectare. The average land area used by rice farmers in the study area is 90 percent below 1 hectare.  Most rice farms in Indonesia are small and fragmented due to historical, socioeconomic, land conversion pressures, and institutional factors. Land fragmentation occurs primarily due to inheritance systems that divide land into many small plots among family members. Land conversion for industry, housing, and infrastructure further reduces the area of ​​productive rice fields. Biophysical factors and limited access to potential land also limit the expansion of new rice fields. Meanwhile, the socioeconomic structure of smallholder farmers encourages households to maintain small plots of land for subsistence. Conversely, suboptimal agrarian policies exacerbate the problem of fragmentation. All of these factors hinder mechanization, reduce efficiency, and weaken farmers' income resilience.
3.2      Analysis of Household Income of Rice Farmers

Figure 2 shows that the household income of rice farmers in Tempuran Village, Central Lampung Regency, and Gunung Sugih Village, Pesawaran Regency, comes from several sources, namely on-farm paddy income, non-rice on-farm income, off-farm income, and non-farm income. On-farm paddy income in both villages contributes the highest to household income in Tempuran Village, at 37 percent, and in Gunung Sugih Village, at 62 percent.

Figure 2. Household income of rice farmers in Tempuran Village
Central Lampung Regency and Gunung Sugih Village, Pesawaran Regency
Source: Primary Data, 2025 (data processing results)

The results of this study indicate that rice is not only an economic commodity but also a staple food and the main activity of the rural economy, producing a relatively large output per unit of land. Because almost every farming family cultivates their own rice fields, most household income still comes from on-farm activities. This is in accordance with empirical studies. (Triyono et al., 2024)shows that the proportion of income from rice farming often reaches a dominant share of more than 50 percent of rice farming income, which is more dominant than other income.
The lowest income in both villages was from off-farm income, with a value of 16 percent in Tempuran Village and 6 percent in Gunung Sugih Village. This condition indicates that the income sources of farming households have not been optimized due to limited employment opportunities. The absence of local industry, inadequate infrastructure, and limited education make it difficult for households to diversify income outside the agricultural sector. Thus, farmers continue to rely on on-farm income as the primary source of household support . This is consistent with research findings (Kusnadi, 2025), which show that off-farm income is significantly influenced by The village's proximity to the market, the center of economic activity,  significantly influences the village's income. These findings indicate that the contribution of rice income to total household income depends on a combination of structural, economic, social, and policy factors. Improving farmer welfare is crucial for strengthening the foundation of on-farm income while simultaneously opening up opportunities for off-farm income diversification.

3.3      Farmer Household Exchange Rate Analysis (NTPRP)

The NTPRP is crucial for monitoring farmer welfare because it provides a snapshot of their purchasing power and economic balance in meeting their daily needs . Furthermore, the NTPRP can serve as an indicator for the government in designing policies that support farmer welfare, particularly in the face of fluctuating prices for agricultural products and basic necessities. (Nugraha , 2022). The exchange rate of household income of rice farmers in Tempuran Village, Central Lampung Regency and Gunung Sugih Village, Pesawaran Regency in 2024 is presented in Table 1 .
The Farmer Household Income Exchange Rate (NTPRP) in Table 1 shows the difference in economic welfare between Tempuran Village and Gunung Sugih Village. In Tempuran Village, the household income of rice farmers reached Rp68,553,291, consisting of agricultural income of Rp55,191,058 and non-agricultural income of Rp13,362,233. In Gunung Sugih Village, the household income of farmers was Rp51,274,123, with contributions from the agricultural sector of Rp37,824,685 and non-agricultural Rp13,449,538.

Table 1. Calculation of the Exchange Rate of Household Income of Rice Farmers in Tempuran Village, Central Lampung Regency and Gunung Sugih Village, Pesawaran Regency.

No	Information	NTPRP	
		Village Tempuran	Village
Gunung Sugih	
A	Income (Rp)	68.553.291	51.274.123	
	1. Income farmer	55.191.058	37.824.585	
	2. Income  non-farmer	13.362.233	13.449.538	
B	Biaya Produksi	8.120.203	9.419.619	
C	Consumtion	29.931.569	40.155.976	
	1. Food	13.073.462	21.411.438	
	2. Non-food	16.858.107	18.744.538	
D	Total Expenditure	38.051.771	49.575.595	
E	Income exchange rate			
	1. Value Total	1,80	1,03	
	2. Production cost	8,44	5,44	
	3. Food consumtion	5,24	2,39	
	4. Non food comsumtion	4,07	2,74	
	5. Total Consumtion	2,29	1,28	
Source: Primary Data, 2025 (data processing results)

The results of this study show that agricultural income in Tempuran Village is higher than in Gunung Sugih Village, which contributes to the difference in NTPRP between the two villages. Production and consumption costs also affect the level of welfare of farmers in both villages. In Tempuran Village, production costs were recorded at Rp8,120,203, lower than in Gunung Sugih Village which reached Rp9,419,619. Food and non-food consumption in Tempuran Village were Rp13,073,462 and Rp16,858,107, respectively, while in Gunung Sugih Village it was recorded at Rp21,414,538 for food and Rp18,744,538 for non-food. Total expenditure in Tempuran Village was Rp38,051,771, lower than in Gunung Sugih Village which reached Rp49,575,595, indicating differences in expenditure patterns that affect NTPRP.  The results of this study indicate that the higher the income level, the greater the farmer's expenditure, meaning that farmers are more prosperous. This is in line with the results of research (Wang et al., 2024), which shows how increased income is reflected in expenditure patterns, indicating increased welfare.
The NTPRP calculation shows that farmers in Tempuran Village have a higher income exchange rate than those in Gunung Sugih Village. The exchange rate to total income in Tempuran Village is 1.80, while in Gunung Sugih Village it is only 1.03, indicating the ability of farmers in Tempuran Village to better meet household needs. The exchange rate to food consumption in Tempuran Village is 5.24, higher than in Gunung Sugih Village which is only 2.74, indicating better food purchasing power in Tempuran Village. These findings indicate that the NTPRP in Tempuran Village shows a relatively higher level of welfare than Gunung Sugih Village, supported by higher agricultural income and higher food expenditure. This is consistent with research results (Gbadebo et al., 2022)  consumption patterns are dominated by staple foods that are relatively cheap per unit of energy (rice, wheat, corn, sago), Due to the large quantity (calorie) requirements, total food expenditure is high even though the price per unit is relatively low. Household survey studies show that staple foods account for the majority of food consumption .

Table 2. Average Exchange Rate of Household Income of Rice Farmers in Tempuran Village, Central Lampung Regency and Gunung Sugih Village, Pesawaran Regency in 2024

No.	NTPRP	Village Tempuran	Village Gunung Sugih	
		Land 
< 1 Ha	Land 
≥ 1Ha	Land
< 1 Ha	Land
≥ 1Ha	
1	Min	0,05	0,30	0,01	0,42	
2	Max	2,28	12,20	3,21	2,11	
3	Average	0,69	1,81	0,81	1,12	
4	Percentage of those with NTPRP < 1	80,90%	42,86%	81,25%	41,18%	
Source: Primary Data, 2025 (data processing results)
Data in Table 2 shows the average Household Income Exchange Rate of Rice Farmers (NTPRP) in Tempuran Village, Central Lampung Regency, and Gunung Sugih Village, Pesawaran Regency in 2024, based on the area of land owned by farmers with land areas less than 1 ha and more than or equal to 1 ha. In Tempuran Village, the average NTPRP of farmers with land less than 1 ha is 0.69,  while for land more than or equal to 1 ha is 1.81. The percentage of farmers with NTPRP below 1 in Tempuran Village is quite high, namely 80.90 % for land less than 1 ha and 4.2.86 % for land more than or equal to 1 ha, which shows that the majority of farmers with small land have difficulty in meeting their consumption and production expenses. The minimum value of NTPRP in Tempuran Village for land less than 1 ha is 0.05 while the maximum value reaches 2.28, indicating a fairly wide variation in welfare between farmer households.
In Gunung Sugih Village, the NTPRP (National Food Inventory) also shows a significant difference between farmers with land holdings of less than 1 ha and those with land holdings of more than 1 ha. The average NTPRP for land holdings of less than 1 ha is 0.81, while for land holdings of more than 1 ha it is 1.12. The percentage of farmers with an NTPRP below 1 in Gunung Sugih Village is higher for those with land holdings of less than 1 ha, at 81.25 %, compared to those with land holdings of more than 1 ha, at 41.18%. This indicates that farmers with smaller plots of land in Gunung Sugih Village have greater purchasing power limitations. The minimum NTPRP value in this village is also very low, at 0.01 for land holdings of less than 1 ha, while the maximum value reaches 3.21, indicating inequality in the economic capabilities of farming households in the area. This is in line with research results (Areef et al., 2021), the influence of land ownership size on consumption expenditure inequality in agricultural households , households . Based on the NTRTP, both NTRTP villages are categorized as less prosperous, and their income from farmer expenditures is low. This is consistent with research findings. (Adriani et al., 2020; Setiawan et al., 2019) Measuring the level of welfare using NTP and NTPRP shows that farmer welfare is still included in the low category because the income they receive from farming is still unable to meet the needs of their households. In line with the results of research (Delvi et al., 2024)that a high NTPRP indicates that farmers have achieved prosperity, while a low NTPRP indicates that farmers are not yet prosperous.

3.4    Determinants of the welfare of rice farmers in Tempuran Village, Central Lampung Regency and Gunung Sugih Village, Pesawaran Regency
Table 3, using the Farmer Household Exchange Rate (NTRTP) welfare indicator, shows that the factors that influence farmer welfare are rice farming income, off-farm income and household food consumption expenditure. Rice farming income influences welfare because it is the main source of income for farmers,  which determines their purchasing power and ability to meet basic needs. Off-farm income is influential because it provides stable additional income and is an important strategy to reduce economic risk. Meanwhile, food consumption expenditure reflects the level of a household's ability to meet basic needs and is a strong indicator of welfare. The combination of these three variables comprehensively describes the economic dimensions of farmer households; naturally,  all three have a significant influence on farmer welfare. This is in line with research results (Kimkong et al., 2023) of cross-household empirical studies,  which show a positive link between income diversification (a combination of farming and off-farm) and welfare indicators,  including food consumption patterns that support the role of food expenditure and income sources.  The variables that do not influence are rice harvest area, farmer age, number of family members, education, farming experience, non-farm income and non-food consumption. The results of this study are in line with   (Kuncorojati, 2025), who found that several socio-economic variables (age, education, experience) had no real effect on NTP. 
Table 3 shows that the rice farming income variable (INCPD) is obtained with a probability value of 0.0001, meaning that rice farming income has a positive effect on farmer welfare. An odds ratio of 1.000 means that every one rupiah increase in farming income will increase farmer welfare by one-fold. The probability of the off-farm income variable (INCOFF) of 0.0004 indicates that this variable has a significant effect on the NTPRP with an odds ratio of 1.000, meaning that farmer welfare will increase one-fold if off-farm income is significant and positive with a probability of 0.0004. The results of this study are in line with research (Kassegn & Endris, 2021)that off-farm rice income is positive and significant, meaning that off-farm income can increase additional income for farmers as farm laborers, thereby increasing farmer welfare.
Table 3 . Binary logit regression analysis of factors influencing farmer welfare (NTPRP) on the characteristics of rice farmers in Tempuran Village, Lampung Regency
Variable	Coefficient	Std. Error	z-Statistic	Prob.  	Odd Ratio	
						
C	-6.015066	2713024	-2217108	0.0266	0.002	
LAPP	0.060000	0.813373	0.073767	0.9412	1.062	
AGE	0.046877	0.041599	1,126,890	0.2598	1.048	
JART	-0.063089	0.194660	-0.324100	0.7459	0.939	
LMPEND	0.089852	0.093852	0.957382	0.3384	1.094	
PNGLMUT	0.032098	0.028998	1,106,876	0.2683	1.033	
INCPD	1.12E-07	2.83E-08	3,949,034	0.0001	1.000	
INCOFF	1.50E-07	4.28E-08	3,511,925	0.0004	1.000	
INCNON	-1.66E-08	1.43E-08	-1,160,723	0.2458	1.000	
KPGN	-2.27E-07	6.08E-08	-3,738,123	0.0002	1.000	
KNPGN	2.39E-08	2.90E-08	0.825646	0.4090	1.000	
McFadden R-squared	0.433404	    Mean dependent var	0.196429		
LR statistic	7,214,363				
Prob(LR statistic)	0.000000	 	 	 	 	
         Information
         * Significant at the 99% confidence level
            Source: Primary data (processed results), 2025

Furthermore, Table 3 shows that the variable of food consumption of farmer households is very important in meeting the needs of farmers' lives, the results of the binary logit food consumption variable show positive results and have a significant effect on the NTPRP with a probability value of 0.0002 and an odds ratio of 1.000. In line with research (Adriani et al., 2020)NTPRP affects farmers' purchasing power, the higher the NTPRP value, the more farmers' purchasing power will increase in improving the welfare of their households. Research results (R Praza & Shamadiyah, 2019; Riyandhi Praza & Shamadiyah, 2020) indicate that food expenditure constitutes the largest proportion of household expenditure, indicating that the welfare level of respondents' households is still low. The results of this study recommend that farmers need to diversify their income with the support of the agro-industry in rural areas, ease of access to modern technology, and the government needs to provide superior seeds, fertilizers, mini-mechanization, and sustainable intensification through farmer development and institutions.

4.   CONCLUSION

The results of the study indicate that the income of farmer households derived from on-farm rice contributes significantly to the income of farmer households, based on the farmer household exchange rate (NTRTP) in Lampung Province, farmers are in a less prosperous condition with NTPRP lower than 1, low farmer income and the condition of farmers is not prosperous. The results of the binary logit analysis show that rice farming income, off-farm income are positive and significant while food consumption expenditure negatively and significantly affects the welfare of rice farmer households in Lampung Province. Policy implications for farmers include the importance of income diversification, production efficiency, and institutional strengthening and human resource improvement.

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