Vertical Market Integration Of Cooking Oil Commodities In Jember Regency : Vector Error Correction Model (VECM) Approach

Abstract

The price of cooking oil in Jember Regency, has continued to fluctuate over the past few months. These changes in cooking oil prices certainly have implications for the decline in people’s purchasing power and the producer’s selling power. Prices at the producer level must be properly transmitted to the consumer level, and vice versa. Therefore, it is important to examine market integration of cooking oil in the Jember Regency. This study aims to analyze the vertical market integration from producers to consumers of cooking oil in Jember regency. This study utilized monthly time series data with a period of 53 series. The data collected was related to food price data at the producer and consumer levels in Jember regency. This research was conducted using the vector error correction model (VECM) to determine the market integration of producers and consumers. Based on the output of the VECM analysis, it was found that the market integration equation model of cooking oil producers and consumers did not have a long-term relationship. The results showed that the market of cooking oil producers and consumers has a short-term relationship or is integrated in the short term only.