Analysis of beef market integration between consumer and producer regions in Indonesia

Abstract

Abstract The research employs secondary data consisting of time series data on beef prices from the consumer regions (Jakarta, Banten, and West Java Provinces) and the producer regions (East Nusa Tenggara, West Nusa Tenggara, Bali, East Java, and Lampung Provinces) obtained from the Center for Information of Strategic Food Prices period January 2018–July 2022. The analytical model utilizes the estimated VAR (vector autoregression)/VECM (vector error correction model). The mean beef price in Indonesia’s producer regions exceeds the normal level (above the reference price), except for East Nusa Tenggara Province, as well as in the consumer regions, which are significantly above the normal level. Beef prices in the producer and consumer regions have a mutual influence in the current and previous periods. The presence of cointegration implies that in the long term, the beef market in the producer regions (East Nusa Tenggara, West Nusa Tenggara, Bali, East Java, and Lampung) is integrated with the consumer regions (Jakarta, Banten, and West Java Provinces) in Indonesia. The most substantial impact of the shock of beef prices in the region of the largest producer is Lampung Province. This research concludes that there is a cointegration of beef prices; in the long term, the beef market in producer regions is integrated with the consumers in Indonesia. Similarly, the beef market will be integrated into producer regions with the consumers in the short term. The VECM is a beef price forecasting model in the producer and consumer regions, which can be considered to have excellent performance.