Author : Panji Deoranto

Summary : The study analyzed the spatial market integration and price transmission and proposed policy direction to enhance market efficiency of the chicken markets in central Java province, Indonesia for the period 2004-2009. Broiler and native chicken prices were increasing, especially during periods with religious activities. Broiler's prices at the farm level fluctuated more than the wholesale and retails levels. Augmented Dickey Fuller test results showed that the was sufficient evidence for the non-stationarity of prices in all market locations. Howeve, differencing all prices at the first level resulted in a stationary process. Pearson correlation test showed a strong correlation between all market pairs indicating a higher degree of market integration. Four to five market pair showed Grager Cauasality conditional at the farm, wholesale and retail levels. However, only a unidirectional price transmission was observed among the market pairs. The Law of One Price test results indicated there were four co-integrated market pairs in each market level. The effect of imposition of import tariff policy and road distance was found significant in increasing prices at retail level.