Price transmission of Arabica coffee between North Sumatra with state main export purpose (America-Europe)

Abstract

Fluctuations in North Sumatra Arabica coffee prices can affect market efficiency and transmission prices of North Sumatra Arabica coffee with the main export destination countries. This can be used as an opportunity by market participants, especially those who have the power to influence prices to manipulate prices. This research was conducted to analyse the transmission price of North Sumatra Arabica coffee with the main destination countries of America and Europe, and analysis of the factors forming the price of Arabica coffee in North Sumatra. The method used in this study is the Asymmetric Error Correction Model (AECM) model which is used for analysis of Arabica coffee price transmission and the Error Correction Model (ECM) model which is used to analyse the factors forming coffee prices with. The results showed that there was an asymmetric relationship between the transmission price of Arabica coffee in North Sumatra and the main destination country in the short run whereas in the long run the price transmission occurred symmetrically. In the analysis of the factors forming the price of North Sumatra Arabica coffee both in the short term and long term are significantly affected by all variables used.