Prices Cointegration Analysis between Rice and Paddy in Indonesia: A Preliminary Study

Yogi Makbul¹, Sudrajati Ratnaningtyas², Pringgo Dwiyantoro¹
(1.Development Studies Department, School of Architecture, Planning and Policy Development, Bandung Institute of Technology, Indonesia; 2. Entrepreneur Department, School of Business and Management, Bandung Institute of Technology, Indonesia)

Abstract: The purpose of this research is to investigate whether integration between rice grain market and rice paddy market occurs. It can be known from the presence, or absence of cointegration between rice price with paddy price. With the knowledge, the government could make the right policies to protect paddy producers, or rice consumers. The research concludes that paddy and rice markets cointegrate. This study uses secondary data survey, of daily paddy and rice prices in various producing areas in Indonesia. This study is also a preliminary phase of a further emprical research in Kabupaten Indramayu, Province of West Java; planned for 2013.

Key words: price; cointegration; market; rice; paddy

JEL code: Q11