VOLATILITY ANALYSIS ON PRODUCER PRICE OF RED PEPPER AND CAYENNE PEPPER IN WEST JAVA PROVINCE INDONESIA Analisis Volatilitas

This study aims to determine the price volatility in producer of red pepper and cayenne pepper in West Java Province. The data used in this research was secondary data focusing on monthly price statistics of red pepper and cayenne pepper producer in West Java Province from 2008 to 2015. The method used in this research was ARCH/GARCH method with best model determination. Based on the research, it was found that the best model for the price of red pepper in producer was GARCH (1,1) with the volatility value of 0,96. It means that volatility of price of red pepper in producer level was influenced by the increase and fluctuations on producer price of red pepper one month before. The best model for the price of the cayenne pepper producer was ARCH (1) with the volatility value of 0,52. It means that price volatility of cayenne pepper in producer level was also influenced by fluctuations producer price of cayenne pepper one month before. The value of volatility price of red pepper in West Java Province is closed to one, so it can be categorized of high volatility. Meanwhile, the price on the producer of cayenne pepper in West Java Province can be categorized of low volatility.


INTRODUCTION
Horticulture is one of the important sub-sectors in agricultural development and is one of the strategic commodities to be developed.Based on the National Medium-Term Development Plan 2015-2019 of Directorate General of Horticulture, horticultural commodities will become a strategic issue that gets serious attention from the government and business actors that influences inflation and contributes to the national economic growth.One of horticultural commodities that becomes a strategic issue and influences inflation is chili.Most people of Indonesia use chili as a raw material to cook every day.Chili is not only used in household scale but also used as a raw material in culinary and industrial businesses, both food and nonfood industries.In recent years, there are many culinary businesses using chili as the raw material.Moreover, the public interest towards the products offered is also high.
One type of chili that is often sought by consumers is red chili.The red chili is one of the most vulnerable agricultural products experiencing price fluctuations.Prices can jump high but can also turn into very low.
Game prices of red chili by middlemen lead to losses to farmers (Devi et al, 2015).
The seasonal nature causes an abundant supply of chili commodity in harvest season, so that the price of chili goes down.Whereas when the supply is limited, the price of chili rises.This is because chili is a seasonal commodity that depends on the climate and a perishable commodity, so chilies cannot be planted and harvested throughout the year.
Based on the research conducted by Aryasita (2013), the supply of chili price still depends on the amount of chili produced, while the amount of chili produced depends on the harvest area and land productivity.
The amount of chili on offer changes every year.This is due to fluctuations in harvest area and production of chili.The amount of chili on offer also depends on rainfall.
During high rainfall, the amount of chili production will be small, so the price of chili becomes expensive.The price of chili also influenced by production and rainfall, according to the research conducted by Farid and Subekti (2012) (1984) the market equilibrium represents the amount demanded which is equal to the amount offered.This is different from the real conditions occurring in the field where there is an often high and unpredictable fluctuation on price due to the imbalance between the supply and demand from the consumers.As Lepetit (2011) if the volatility is more increasing, then price uncertainty in the future will be higher.
High price fluctuation also allows traders to manipulate price information at the farmer level.If the price fluctuation and uncertainty gets higher, it will harm some parties.
Cobweb model is a theory that explains the relationship between price and quantity (in this case that is production), so this model can be used to illustrate the state of the volatility of a product seen from the price.Price and quantity are described interconnected as a continuous and recurring Increased imports cause the price of garlic producers in the market to increase, causing price fluctuations more difficult to predict and price uncertainty at the producer level.
Price uncertainty is commonly referred to as a price volatility problem.
West Java Province is one of the chili suppliers which supplies both Spanish pepper (red chili) and cayenne pepper to various regions of Indonesia to meet consumer demand.When the inventory or stock is reduced, it will lead to a mark-up in all regions in Indonesia.Some districts in West Java that contribute greatly to the supply of red chili and cayenne pepper are      The Divergent Cobweb Model occurs as a result of greater supply elasticity when compared to demand elasticity.Price cycle begins with an offer of Q 0 , that it is a lack of the number of goods offered so that prices will tend to increase.As the price increases then the offer will also increase so that it changes to Q 1 .An increase in supply will lead to a fall in prices.The fall in prices will lead to a decrease in the amount of production, this will lead to an increase in prices.High prices again encourage a larger increase in the production side resulting in excess supply.This cycle will occur continuously until the end of production becomes very abundant or there is scarcity related to resource availability, supply elasticity will change so that production cannot continue to be done.As for the volatility producer price of cayenne pepper in West Java Province was 0,52 so it can be classified into low volatility.On dry land, chili is usually planted ahead of the rainy season while in the paddy field, chili is usually planted before the dry season.The pattern of pepper crop is mostly polyculture.
The planting time of chili in paddy field, rainfed paddy field, and on dry land lasts for 6 months, namely, April, May, June, September, November, and December.The harvest period of chili lasts for 10 months from January to October and there is no chili harvest in November and December, so there is no supply of chili for two months in Garut.
The absence of chili stock for two months can affect the price both at provincial and national level.When there is no stock, the price is rising and the condition will get worse with increasing demand for chili due to religious festivals.Thus, the low volatility of producer prices in West Java Province is caused by the supply of chilli that can meet the demand, and some chilli needs in West Java Province can be met from the region itself or still in one province.

CONCLUSION AND SUGGESTION
Price volatility at the producer level of Thus, it is necessary to address the problem of volatility.One of the ways is on-farm activities.One of the on-farm activities that can be done is to improve the management of cropping patterns of red pepper and cayenne pepper.So that either during the harvest season or not, the supply will still be available and the price does not soar both at the producer and consumer level.
, the factors that influence the price of chili in Indonesia are production pattern, production cost, distribution, consumption during fasting month and Eid el-Fitr.Fluctuation in the price of chili caused by various factors makes people mendekati satu sehingga dapat dikatakan volatilitasnya tinggi.Harga produsen cabai rawit di Provinsi Jawa Barat dapat dikategorikan volatilitasnya rendah.Kata kunci : ARCH/GARCH, cabai rawit, cabai merah, volatilitas chain.High prices will cause high production, then a lot of supply will result in low prices, and will lead to low production, and so on.Three models of cobweb are convergent, divergent, and continuous.The following are some studies on price volatility that have been conducted, one of this is the research conducted by Asmara et al (2011) showing that world oil price volatility varies over time.According to Bakari et al (2013), the volatility values of cooking oil price in the world and Indonesia are close to one, indicating a long-term volatility trend with a greater volatility level, resulting in high volatility in the future to be cautious, especially as a result of an increase in fuel or biofuel demand for its effect on the price of CPO at global level.Other research that use ARCH/ GARCH model is conducted by Sumaryanto (2009) the volatility of retail price among food commodities such as rice, wheat flour, granulated sugar, eggs, cooking oil, red chili, and onion indicates that the prices of food commodities became more volatile.Other studies about volatility with ARCH/GARCH method is research according to Wijaya et al (2014), the volatility of garlic producers price in East Java before and after trade liberalization showed high volatility.This is because garlic production in Indonesia cannot meet the demand after trade liberalization, so the demand is met by increasing imports.worry.This is because chili has become one of the staple food as a side dish to complement the main course.Price becomes one of the indicators of food sufficiency of society, so, price stability is needed to support the stability of national economy (Edi et al, 2014).Basically, excess supply or excess demand causes high price and unpredictable fluctuation.Gilbert and Morgan (2011) state that low supply and high demand cause price to rise and vice versa, so the price becomes more volatile.Too high price and unpredictable fluctuation can increase price volatility.According to Hirshleifer

F
Figure 1.Analytical Framework Notes :

Figure 2 .
Figure 2. Producer Price of Red Pepper vs Producer Price of Cayenne Pepper in West Java Province of Indonesia 2008-2015 red pepper and cayenne pepper in West JavaProvince can be categorized as low volatility because the value of volatility is smaller than one.The producer price volatility of red pepper in West Java Province was influenced by one month's previous volatility and one month's previous price variant, where the volatility was 0,96.Producer price of cayenne pepper in West Java Province was influenced by volatility of one month earlier that was equal to 0,52.The volatility price of chilies at the producer level based on the research that has been done is closed to one, so there is a possibility that the price of chili at the producer level can turn into high volatility.The price of chilies at the producer level that fluctuates from one period to another causes the possibility of price at the consumer level experiencing fluctuations, such things can be detrimental both at the community and national level.Thus the need for further research on price volatility at the consumer level and research on the factors that influence volatility, as well as the attention to the issue of the price, is by monitoring the stock or supply of chilli sufficient.

Table 1
is stationary at the level and confidence of 99%.After knowing the data of producer prices of red chili and cayenne pepper to be

Table 1 .
The Stasionerity Test Results of Red Chili and Cayenne Pepper Prices in West Java Province

Table 2 .
The Best ARIMA Models for Producer Prices of Red Chili and Cayenne Pepper in West Java Province

Table 3 .
The Results of ARCH/GARCH of Producer Price of Red Chili and Cayenne

Table 4 .
The ARCH-LM Test Results

Table 5 .
The Results of Volatility Analysis of Producer Prices of Red Chili and Cayenne Pepper in West Java Province