PRICE DYNAMICS AND RED CHILI PRICE LINKAGES BETWEEN MARKETS IN SURPLUS AND DEFICIT AREAS

Abstract

The price of red chilies in surplus and deficit areas in Indonesia is interrelated because an excess supply of red chilies in surplus areas can affect prices in deficit areas and vice versa. The study wants to provide information on the shape of price dynamics and price relationships between surplus and deficit markets. Using red chili price data for the weekly period from January 2019 to December 2021. The price of red chilies in the East Lombok market, West Nusa Tenggara Province (WNT) is a surplus area, and Kupang City, East Nusa Tenggara Province (ENT) is a deficit area. Data source from the National Strategic Food Price Information Center released by Bank Indonesia. Data were analyzed using the coefficient of variation (CV) and the Vector Error Correction Model (VECM) method. The study found that there are significant differences in price dynamics and there are price linkages in both the short and long term between markets in surplus and deficit areas. The differences in geography, distance, marketing infrastructure, and market information systems also contribute to price linkages between markets in surplus and deficit areas. Collaboration between market players, the government, and accurate and easily accessible market information is required to create effective price linkages throughout Indonesia.

Keywords

• red chili
• price dynamics
• price linkage
• vecm