Exploring the pattern of price interdependence in rice market in Indonesia in the presence of quality differential

Figures & data

Table 1. Description of investigated rice prices in IDR

Rice variety	Quality category	Mean	Standard deviation	Minimum	Maximum
Cianjur Kepala (CK)	Premium	13,366	496.6	12,000	15,600
Cianjur Slyp (CS)	Premium	12,171	486.7	11,000	14,925
Setra (SE)	Premium	12,219	583.3	10,900	13,825
Saigon (SA)	Medium	11,117	602.7	9900	13,200
Muncul 1 (M1)	Medium	10,465	734.6	9000	13,675
Muncul 2 (M2)	Low	9656.8	719.9	8200	12,400
Muncul 3 (M3)	Low	8938.3	704.1	7500	11,825
IR 641	Medium	9990.3	649.1	8800	12,650
IR 642	Low	9091.8	713.2	8100	12,075
IR 643	Low	8198.2	488.16	7200	10,300
IR 42	Medium	10,486	730.4	9000	12,600

Source: Cipinang Market

Table 2. Corresponding p-value of ADF unit root test

Price variables	Level		First difference
	Constant	Constant and trend	Constant	Constant and trend
CK	0.9066	0.9254	0.0000	0.0000
CS	0.9660	0.9668	0.0000	0.0000
SE	0.2139	0.2489	0.0000	0.0000
SA	0.7147	0.4243	0.0000	0.0000
M1	0.5061	0.6154	0.0000	0.0000
M2	0.2484	0.2964	0.0000	0.0000
M3	0.3257	0.4363	0.0000	0.0000
IR 641	0.4352	0.1142	0.0000	0.0000
IR 642	0.6897	0.6641	0.0000	0.0000
IR 643	0.0025	0.0147	0.0000	0.0000
IR 42	0.6144	0.7241	0.0000	0.0000

Annotation: The lag selection in the unit root test is based on the AIC. Null hypothesis is the existence of unit root. (Source: Author’s conception)

Table 3. Results of Johansen Cointegration Test

Rank of cointegration	Constant		Constant and trend
	Trace-test	P-value	Trace-test	P-value
0	314.11	0.0000	382.70	0.0000
1	235.57	0.0001	268.53	0.0001
2	165.92	0.0218	192.40	0.0282
3	111.98	0.2588	137.10	0.2315
4	78.770	0.4156	103.03	0.2988
5	48.965	0.6870	72.907	0.4047
6	29.367	0.7563	43.131	0.7334
7	13.154	0.8815	23.712	0.8478
8	4.6736	0.8394	8.2297	0.9724
9	0.14233	0.7067	2.1733	0.9430

Annotation: Number of lags was selected by AIC. (Source: Author’s conception)

Table 4. Estimated cross price elasticity of rice product

Normalization (Independent)	Dependent variable
	CK	CS	SE	SA	M1	M2	M3	IR 641	IR 642	IR 42
CK	1.00	−3.50	−2.11	−3.31	−8.05	−6.33	−1.12	−4.40	3.59	−14.88
CS	−0.28	1.00	−0.60	−0.95	−2.30	−1.81	−0.32	−1.26	1.03	−4.25
SE	−0.47	−1.65	1.00	−1.56	−3.81	−2.99	−0.53	−2.08	1.70	−7.04
SA	−0.30	−1.05	−0.64	1.00	−2.43	−1.91	−0.34	−1.33	1.08	−4.49
M1	−0.12	−0.43	−0.26	−0.41	1.00	−0.78	−0.14	−0.54	0.45	−1.85
M2	−0.16	−0.55	−0.33	−0.52	−1.27	1.00	−0.18	−0.69	0.57	−2.35
M3	−0.89	−3.11	−1.88	−2.95	−7.17	−5.63	1.00	−3.92	3.19	−13.25
IR 641	−0.22	−0.79	−0.48	−0.75	−1.83	−1.44	−0.25	1.00	0.82	−3.38
IR 642	0.28	0.97	0.59	0.92	2.24	1.76	0.31	1.22	1.00	4.14
IR 42	−0.06	−0.23	−0.14	−0.22	−0.54	−0.42	−0.07	−0.29	0.24	1.00

Annotation: The estimated elasticity was calculated based on the normalized cointegrating vectors by Johansen methods. All parameters were found to be statistically significant at 5% level of significance. The cointegrating vector was also specified by including constant and dummy variables representing the implemented price policy during the periods of investigation. (Source: Author’s conception)

Table 5. Estimated half-life time adjustment from restricted VECM (day)

Normalization	Dependent variable
	CK	CS	SE	SA	M1	M2	M3	IR 641	IR 642	IR 42
CK	13.86	2.89	17.33	9.90	5.77	1.77	8.66	6.93	2.57	3.54
CS	11.55	3.30	16.50	9.49	5.45	1.79	8.55	7.06	2.57	4.41
SE	8.29	2.21	14.51	9.52	5.44	2.02	8.54	7.05	2.81	4.07
SA	8.28	2.05	14.51	18.21	6.75	1.78	8.54	7.05	2.79	3.61
M1	8.27	2.27	14.54	9.52	5.44	2.09	8.54	9.83	2.91	5.09
M2	12.44	2.26	53.77	9.52	8.00	3.05	8.50	18.60	3.80	5.22
M3	8.27	2.04	14.51	9.52	5.44	2.06	8.54	7.05	2.96	3.61
IR 641	8.27	2.23	14.51	14.54	8.03	1.98	14.19	7.05	3.00	4.04
IR 642	7.34	2.04	19.87	9.52	4.71	1.78	13.99	7.05	2.83	3.61
IR 42	8.26	2.04	14.51	11.08	6.52	1.92	10.85	7.81	2.56	3.61

Annotation: The estimated half-life time adjustment was calculated based on the estimation of error correction coefficients, which were statistically significant at 5% level of significance from the restricted VECM. (Source: Author’s conception)

Table 6. Average of cross price elasticity of rice products based on rice quality category

Rice product	Premium	Medium	Low
Premium	−1.43	−4.66	−2.18
Medium	−0.39	−1.50	−0.66
Low	−1.15	−4.01	−2.90

Source: Author’s conception

Table 7. Average half-life time adjustment (days) based on rice quality category

Rice quality price	Premium	Medium	Low
Premium	10.14	5.88	4.54
Medium	9.16	6.71	5.33
Low	9.69	5.12	6.20

Source: Author’s conception

Table 8. Estimated coefficient of price policy in 2016 from long-run equation

Normalization	Dependent variables
	CK	CS	SE	SA	M1	M2	M3	IR 641	IR 642	IR 42
CK
POL 2016		0.05	0.02	0.01	0.18	0.13	0.02	0.06	−0.10	0.29
CS
POL 2016	−0.01		−0.00	−0.04	0.07	0.03	0.00	−0.01	−0.05	0.07
SE
POL 2016	−0.01	0.01		−0.03	0.09	0.05	0.00	0.00	−0.06	0.11
SA
POL 2016	−0.00	0.04	0.02		0.16**	0.11**	0.014	0.04**	−0.09	0.24**
M1
POL 2016	−0.02	−0.02	−0.02	−0.06**		−0.02	−0.00	−0.04**	−0.02**	−0.05
M2
POL 2016	−0.02	−0.02	−0.02	−0.06**	0.02**		−0.00	−0.03**	−0.03	−0.01
M3
POL 2016	−0.02	−0.00	−0.00	−0.04	0.05	0.02		−0.01	−0.05	0.05
IR 641
POL 2016	−0.01	0.00	−0.00	−0.03**	0.08**	0.04**	0.00		−0.05	0.09
IR 642
POL 2016	0.78**	−0.05	−0.03	−0.08**	−0.04	−0.05	0.01	−0.07**		−0.14
IR 42
POL 2016	−0.02	−0.01	−0.01	−0.05**	0.03	0.00	−0.00	−0.03	−0.03

Note: Annotation: *significant at 10% level, ** significant at 5% level, *** significant at 1% level (Source: Author’s conception)

Table 9. Estimated coefficient of price policy in 2017 from long-run equation

Normalization	Dependent variables
	CK	CS	SE	SA	M1	M2	M3	IR 641	IR 642	IR 42
CK
POL 2017		0.38**	0.20**	0.37**	1.08**	0.83**	0.02	0.52**	−0.75**	2.23**
CS
POL 2017	−0.11**		−0.03	0.00	0.21**	0.14**	−0.10**	0.04	−0.36**	0.61**
SE
POL 2017	−0.09**	0.04		0.05	0.32**	0.23**	−0.09**	0.09	−0.41**	0.81**
SA
POL 2017	−0.11**	−0.00	−0.03		0.19**	0.13**	−0.11**	0.03	−0.35**	0.58**
M1
POL 2017	−0.13**	−0.09**	−0.08**	−0.08**		−0.02	−0.13**	−0.07**	−0.26**	0.22**
M2
POL 2017	−0.13**	−0.08**	−0.07**	−0.07**	0.03		−0.13**	−0.06**	−0.28**	0.28**
M3
POL 2017	−0.01	0.32**	0.17**	0.31**	0.95**	0.73**		0.45**	−0.69**	1.99**
IR 641
POL 2017	−0.11**	−0.03	−0.05	−0.02	0.14**	0.08**	−0.11**		−0.33**	0.48**
IR 642
POL 2017	−0.21**	−0.35**	−0.24**	−0.32**	0.32**	−0.49**	−0.21**	−0.04**		0.09**
IR 42
POL 2017	−0.15**	−0.14**	−0.11**	−0.13**	−0.12**	−0.12**	−0.15**	−0.14**	−0.21**

Note: Annotation: *significant at 10% level, ** significant at 5% level, *** significant at 1% level (Source: Author’s conception)