SHALLOT SPATIAL MARKET INTEGRATION BETWEEN SURPLUS AND DEFICIT AREAS

Abstract

Shallot is an important commodity in several countries so that it is a commodity that is widely traded internationally. Shallots for the Indonesian people are one of the staple foods that determine inflation. Shallot production potential for Indonesia is not evenly distributed, there are areas of surplus and there are areas of deficit so that there is an opportunity for an imbalance between supply and demand. This difference causes price disparities between surplus and deficit regions if markets are not integrated. The literature on the results of studies on spatial market integration between surplus and deficit areas in traditional markets and modern markets for shallots has not been widely found. Using time series data, shallot commodity prices for the period July 2016-May 2020. Using market prices spatially, namely prices in traditional markets and modern markets in the city of Surabaya (surplus) and prices in Kupang (deficit). Market integration analysis uses Johansen co-integration, Granger causality and VAR-VECM. The results of the study found that the Shallot price between the surplus and deficit markets are integrated into the long run but in the short run it is not perfectly integrated. There is no causality relationship between markets. Markets have a mechanism for adapting themselves to changing situations in the market. The influence of marketing infrastructure, transportation and the often uncertain drive of demand is driving the situation. Information asymmetry occurs as a result of these conditions. Policies on infrastructure improvement and market information disclosure to ensure a balance of supply and demand need to be a priority.

Keywords

• shallots
• surplus and deficit
• cointegration
• var-vecm