Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Integration and Transmission of Local Granulated Sugar Prices between Surplus and Deficit Areas

Author(s): Doppy Roy Nendissa, Worakamol wisetsri, Noor rizkiyah, Jeky Melkianus Sui, Marthen r. Pellokila, Evi Feronika Elbaar

The imbalance of supply and demand for sugar can be a threat to regions that only rely on supplies of outside their region such as East Nusa Tenggara (NTT), Indonesia. Study examines the market integration and transmission speed of local sugar prices spatially between prices in East Java and prices in NTT. Using time series monthly price for the period of July 2016 until January 2020. Using the integration analysis from Granger and Johansen and the VECM approach for the price transmission rate test. The result shows that the relationship between the price of sugar in East Java and NTT only has a unidirectional relationship. The price of sugar in East Java affects the price of sugar in NTT, but not the other way around. Price changes that occur are not transmitted immediately. Price response occurs very slowly to change. The condition of marketing infrastructure, transportation and asymmetric price information becomes an obstacle to price integration and transmission. It is necessary to improve infrastructure and openness of markets and prices in a transparent manner among market players.

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