Market integration analysis of Cayenne Pepper (Capsicum frutescens L.) in South Kalimantan

Abstract

One of the horticultural products in great demand by the public is cayenne pepper. The need for cayenne pepper often increases dramatically. Conditions like this occur during religious holidays, so the impact is a sharp price increase which results in price instability. This research aims to analyze price variations and market integration for cayenne pepper between markets in South Kalimantan. The price variation analysis method uses the coefficient of variation, and market integration analysis uses the VAR (Vector Autoregression)/VECM (Vector Error Correction Model). The results showed that the price variation of cayenne pepper at the consumer level was high and unstable. The high coefficient of variation occurred in 2018 and 2021. Market integration in Banjarmasin City, Tabalong Regency and Kotabaru Regency is only integrated in one direction. Short-term and long-term VECM tests show that several variable indices have a relationship. Banjarmasin City and Kotabaru Regency, in the commodity of cayenne pepper show a long-term relationship with Tabalong Regency. The Impulse Response Function (IRF) shows that the cayenne pepper commodity has a positive and negative response. Forecast Error Variance Decomposition (FEVD) shows that prices in Banjarmasin City contribute to the markets of Kotabaru Regency and Tabalong Regency to varying degrees. Bajarmasin City Market contributed the most to itself by 79.91% in the commodity of cayenne pepper.