The implications of the COVID-19 pandemic on rice market performance in Java, Indonesia

Abstract

Abstract Applying the multivariate cointegration tests with daily prices during the period August 15, 2019, to August 11, 2020 (250 data), this paper examines whether prices in the rice deficit market (Jakarta) are co-integrated with prices in surplus markets (Semarang and Surabaya). Research data is the average daily price in traditional markets in Jakarta, Semarang, and Surabaya. The main focus is on the effect of implementing various programs and policies relating to controlling the spread of COVID-19 to the integration of the rice market in Java. On March 02, 2020, the first two COVID-19 cases in Indonesia were confirmed as a dummy variable that we use regarding controlling borders between regions and restricting the movement of goods. The cointegration tests find that the domestic rice prices of Jakarta - Semarang and Jakarta - Surabaya are integrated both in short-run and long-run periods. In the short term, programs and policies relating to controlling the spread of COVID-19 do not affect the integration of Java’s rice market. One reason is that during the pandemic, the rice supply chain’s performance was still protected by the government to maintain the stability of rice supply for the citizens.