Analysis of Vertical Market Integration for Rice Commodities between Serdang Bedagai Regency and Medan City

Abstract

Rice is the main commodity food for Indonesian people. The majority of Indonesian people consume it on daily basis. Due to this reason, Rice has a strategic value not only to live the life of society but also to be used as a parameter of the country's economic and social stability. If the scarcity or unmet need for rice happens, it will have an impact on inflation and social turmoil. The purpose of this study was to analyze and analyze the integration of the rice market in the short and long term between the Serdang Bedagai regency and Medan city. The data used in this study is secondary data using monthly time series data from January 2014 to December 2018. Timmer's Index of Market Connection Coefficient Analysis Method is used as the analytical method to measure the short-term and long-term market integration. This index was developed by Timmer (1987). The results showed that the market integration level of wholesale rice prices in the short term between the Serdang Bedagai regency and Medan city was low with an IMC value of 1.985> 1. There is long-term integration between the markets of the Serdang Bedagai regency and Medan city wholesalers with a coefficient value of b2 of 0.713> 0. The level of market integration in the short term between the Serdang Bedagai regency and Medan city retail rice price is low with an IMC value of 2.243> 1. There is long-term integration between the market of the Serdang Bedagai regency and Medan city retail with a coefficient of b2 of 0.463> 0. Keywords: Market Integration, Rice, Index of Market Connection.

Analysis of Vertical Market Integration for Rice Commodities between Serdang Bedagai Regency and Medan City

“…markets at the farmer level). Timmer (1986) concluded that the market structure consists of one primary market and several secondary markets. The primary market controls price formation while the secondary market responds to conditions in the primary market.…”