International Business Management

Year: 2017
Volume: 11
Issue: 12
Page No. 1982 - 1990

Analysis of Price Formation of Onion and Garlic Commodities: A Framework of Supply Chain Management

Authors : M. Wahyudin, Anton Agus Setyawan, Muzakar Isa, M. Farid Wajdi and Syamsudin

Abstract: Despite the fact that the commodities of onion and garlic contributes to relatively high inflation in several areas in Indonesia including in ex-Surakarta Residency, these commodities are undeniable very essential. The dependency of onion and garlic supply and the length of the distribution channels have negative impact on the price determined by the brokers or traders as the distributors of the commodity to the consumers. The study aimed to analyze the pattern of price formation and distribution of onion and garlic in the adjacent area of ex-Surakarta Residency. The analysis framework used in the study was the supply chain management. The design of the study was mixed method, namely the quantitative survey and qualitative approach of in-depth interview. The population of the study is the entire parties involved in the supply chain of garlic and onion in ex-Surakarta Residency. The sampling methods were puRp.osive sampling and quota sampling. The analysis tools were data Envelopment Analysis (DEA), analysis of producer share, margin and margin profit ration, price correlation analysis and price transmission elasticity analysis. The study indicated the price fluctuation of onion is caused by the planting season and climate change, seed quality and seed market share, cartels on various levels and particular seasons of celebration. Meanwhile, the fluctuation price of garlic is primarily caused by the import dependency which reached 90%. Analysis of price transmission elasticity adduced the price pattern of onion and garlic at the level of the consumer is higher compared to the price change at the level of producer. Te market participants have to face imperfectly competitive market and inefficient marketing system. The most dominant price formation for onion was transportation costs while for the garlic was labor costs. Analysis on supply chain efficiency indicated the performance of the distributors in the supply chain of garlic and onion was inefficient. The inefficiency of onion supply chain took place in the farmer level where the allocation of fertilizer, seed and labor costs is inefficient yet. The efficiency of garlic supply chain was evidenced at the level of retailers and yet it endured non-optimal labor costs.

How to cite this article:

M. Wahyudin, Anton Agus Setyawan, Muzakar Isa, M. Farid Wajdi and Syamsudin , 2017. Analysis of Price Formation of Onion and Garlic Commodities: A Framework of Supply Chain Management. International Business Management, 11: 1982-1990.

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