Climate Change and Milk Price Volatility in Indonesia

Arief Daryanto, Diani Aliya Sofia, Sahara Sahara and Antonya Rumondang Sinaga
Additional contact information
Arief Daryanto: Department of Economics, IPB University, Indonesia
Diani Aliya Sofia: Department of Economics, IPB University, Indonesia
Antonya Rumondang Sinaga: College of Vocational Studies, IPB University, Indonesia

International Journal of Economics and Financial Issues, 2020, vol. 10, issue 2, 282-288

Abstract: The international food crisis from 2007 to 2010 impacts the fluctuation of world's food prices. Indonesia is one of the developing countries that are vulnerable to volatility in food prices because food is a necessity that is still partly imported and hence impactingdomestic prices. This problem has been excerbated by tthe fact that domestic fresh milk production made a relatively small contribution to the availability of milk to meet Indonesia's consumption. This study aims to analyze the volatility of fresh milk prices in three largest milk producer regions in Indonesia, namely East Java, West Java, and Central Java, from June 2015 to December 2018. The study used ARCH GARCH model. The results of this study shown that fresh milk prices in West Java was volatile and it was influenced by the volatility of the previous period. Climate change and feed prices yielded positive responses on the volatility of fresh milk price in West Java. Subsequently, it achieved a stable price level in the long run. In the short run, the highest response of the milk price volatility shock was shown by the West Java's fresh milk price volatility itself.

Keywords: ARCH-GARCH; fresh milk prices; VECM; volatility (search for similar items in EconPapers)
JEL-codes: O13 Q54 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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