Institutional Arrangement for Food Price Stabilization and Market Distribution System: Study of Chili Commodity in Banyuwangi Regency

Abstract

The fluctuating development of chili prices implies that the maintained supply of chili is very important to maintaining the stability of food prices. The value chain integration of the chili commodity from upstream to downstream supported by the availability of adequate infrastructure and institutions is the main prerequisite in increasing the productivity of chili commodities. The purpose of this study is (1) to give a description of the chili commodity marketing chain in Banyuwangi Regency; (2) analyze the determinants of structure, conduct, and performance of the chili commodity market in Banyuwangi Regency. The analytical method used consists of the Autoregressive Integrative Moving Average (ARIMA) and Structure Conduct Performance (SCP) models.The results of the study show that price determination was based on market mechanisms and collective agreements for farmers who partner with collectors and food processing industries. However, the lack of price and knowledge information in market analysis and projections of price movements and the absence of special institutions that deal with chili governance and limited use of technology have led to the emergence of asymmetrical information from chili businesses and the growth of new players in the trade system that dominates the chili trade. The chili market structure tends to oligopsony, which has the power to influence market prices and is concentrated, causing little competition between chili traders in Banyuwangi Regency.