Monitoring System for an Agricultural Market *

1. Monitoring System for an Agricultural Market* Research Institute, Padjadjaran University Ronnie S. Natawidjaja, Ph.D * A research funded by The Indonesian Ministry of Research and Technology, 1999-2001

2. Background • Agricultural product prices are more fluctuted than any other market, caused by a seasonality, uncoordinated planting, and natural disaster; • In developing country, the fluctuation has been agrevated by un-fair trading practices, speculations, and regional market disparities; • Unstable and extreem price hike for strategic food price can lead to a food insecurity condition and political instability.

3. Background • We need a system that can intelligently gives an early warning when and where “an indication of a problem” detected in the market so that “ a remedy can be made; • A market monitoring system will assist and maintain a free “managed” market.

4. Research Objectives • To identify and detect a natural flow of product and market connection of an agricultural market in the study area; • Set up a price recording and data inputing in certain important points of the market for three strategic commodities: rice, a granulated white sugar, and cooking oil; • Develop a system, which can detect and indicate an isolated price increase and price instability.

5. Methodology • Run a Rapid Marketing Appraisal (RMA), to see: • flow and direction of market distribution • possibility of market domination; • Determine market locations and procurement method for a daily market price data collection; • Determine an appropiate method for market integration measure and coefficient; • Develop a web based interface for data inputing and market eficiency report.

6. RMA Result ofRice Physical Flow Main rice physical distribution line is a movement of rice stock from • surplus area/production center to a deficit or consumption area, • a terminal/distribution or central market to consumer, • one area to the other to exchange for suitable quality demanded by local consumer.

7. RMA Result ofGran. White Sugar Physical Flow • The flow of granulated sugar distribution in West Java is mostly depend upon business decision of distributors in Jakarta. • There are 3 entrances for imported sugar, through Jakarta, Cirebon, and Merak harbor. Sugar imported through Cirebon is mostly for local distribution.

8. Price Acquisition Location Price data collection locations were determine on the main distribution points of the observed commodities, those are Bandung, Jakarta, Bogor, Cirebon, Serang.

9. Web Application

10. Market Integration Model • 1999-2000: Autoregresive Conditional Heteroskedasticity (Mendoza and Rosegrant, 1995) • Good market eficiency measurement technic • Very intensive computational load • Unstable results • 2000-2001:Autoregresive Distributed Lag (Ravallion, 1986) • Standard measurement • Managable computational work

11. Market Integration Model Autoregresive Distributed Lag (Ravallion, 1986) (Hi-Hit-1) = (ai-1)(Hit-1-HAt-1) + bi0(HAt - HAt-1) + (ai+bi0+bit-1) HAt-1 + giX + mit Where: Hi = Price at market i at period t Hit-1 = Price at market i at period t-1 HA t = Price at a destination market A at period t Hit-1 = Price at market i at period t-1 HA t = Price at a destination market A at period t-1 X = Seasonal faktor

12. Spatial Integration of Rice Market

13. Spatial Integration of Granulated White Sugar Market

14. Conclusion • Data sustainability, accuracy and consistency is very important to ensure the information quality; • Ravallion model coefficients are sufficient to be used for efficiency measure of the market; • The application can detect average of 10% isolated price increase; • Compare to 2 other data sources, Center of Statistics Beaurau is the most reliable; • The application should be operated and maintained by the Ministry of Trade.

15. Thank you www.faperta.unpad.ac.id/intelpas