Analysis of Shallot Price Volatility at Producer Level in West Nusa Tenggara Province

Abstract

West Nusa Tenggara (NTB) is a shallot producing vicinity in Indonesia, but the price of shallots fluctuates every so often. This study aims to analyze the volatility of shallot prices at the producer level. The analysis uses secondary data, namely the average monthly price of shallots from January 2019 to December 2023. The data were analyzed for trends using Double Exponential Smoothing, and ARCH-GARCH to measure the level of volatility. The results show that shallot production in West Nusa Tenggara has experienced a downward trend, while prices at the shallot producer level tend to increase from IDR 21,490 in January 2024 to IDR 21,510 per kilogram in December 2024. Price volatility at the producer level is classified as extremely high, based on the total Arch and Garch value of 1.3439. Price volatility at the producer level is caused by dependence on the season, the position of farmers as price takers, weak farmer institutions, and minimal post-harvest facilities. These results highlight the necessity for targeted policy measures to mitigate price volatility, enhance farmer organizations, and upgrade infrastructure, all of which are essential for maintaining price stability and safeguarding farmers' incomes.