Palm Oil and Rubber Price and Trader’s Behavior at International towards Local Level
by Rakhma Sujarwo
Date of Examination:2020-05-20
Date of issue:2021-06-17
Advisor:Prof. Dr. Bernhard Brümmer
Referee:Prof. Dr. Stephan von Cramon-Taubadel
Referee:Prof. Dr. Oliver Mußhoff
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Abstract
English
The dynamics in trade are inseparable from the influence of policies, prices and the role of traders themselves. Although trade policies of exporting and importing countries differ, generally the policies support the domestic trading sector but can be a challenge for the one of the opposite countries. This threat usually results in changes in prices that can be detrimental to local traders. Even more, it may affect their revenue, so anyone who cannot adapt to the new situation will most likely leave the market. In the agricultural sector of developing countries, traders are able to bridge the gap between factories and farmers due to farmers’ lack of capital, information and knowledge. Moreover, the greater the number of traders, the more it is favourable due to market competition, where the less the number of traders available in the area, the bigger the market power they could gain. This market power can influence the trader’s behaviour in how they determine the buying price. Thus, observing the effect of a trade policy to price in targeted country, analysing factors affecting local traders to remain in or exit the market and investigating the influence of market power in buying choice and price determination by traders are appealing to be conducted. To achieve those three investigation objectives, we study the case of oil palm and rubber trader in the Jambi province, Indonesia. Indonesia represents an agricultural country where its agricultural sector contributes up to 13% of the total of Indonesian Gross Domestic Product in 2018. Also, the Indonesian oil palm and rubber product trading activities provide a large contribution to the country's foreign exchange. Jambi itself is located on Sumatra island, in the west of Indonesia. Oil palm and rubber plantation in the province have rapidly expanded, which brings indirect land use change issues.
Keywords: Palm oil; Rubber; Price Transmission; VECM; Logistic Regression; Discrete Choice Experiment; Smallholder Trader