Experience Shocks of Strategic Food Consumers in Indonesia During Covid-19 Pandemic

Abstract

COVID-19's negative externalities disrupted the supply of several commodities. Meanwhile, to combat the spread of COVID-19, various countries have implemented a lockdown policy, which impacts the economy's balance. Consumers' risks are increasing due to economic changes caused by the COVID-19 pandemic, which affects the higher level of volatility of various agricultural commodities in Indonesia, particularly strategic commodities. Thus, this research was designed to examine the experience shock of strategic food consumers during Covid-19 pandemic. The ARCH/GARCH model was used to describe the strategic food price movement pattern using a set of weekly consumer price data from March 2020 until August 2021. This study found price volatility of strategic food commodities is classified into three categories. For starters, the extreme volatility of commodities such as garlic and cayenne pepper indicates that future buyers will face more significant uncertainty and risk. Furthermore, these commodities will generate fluctuating price swings in the future, resulting in greater experience shock for consumers. Second, commodities with high price volatility, such as rice, chicken meat, eggs, shallots, and sugar, signal that these commodities will subject consumers to a huge shock due to their high price volatility. Third, minimal volatility, such as that found in meat, red chilli, and cooking oil, indicates that customers will face less uncertainty in the future.

How Was the Staple Food Supply Chain in Indonesia Affected by COVID-19?

“…The result was that the short-term wholesale prices doubled due to supply constraints, although consumers suffered less, with official sources indicating that retail prices also increased on average by only 10% in Canada and 30% in the USA (Weersink et al 2021, p. 3). Undoubtedly, price volatility for staple commodities increased significantly as a direct result of the pandemic (Laili et al 2022).…”

“…Eight commodities/foodstuffs were selected for this study, based on their consumption and contribution to inflation, as identified by the National Strategic Food Price Information Center and as employed in previous studies (Laksono and Yuliawati 2021;Laili et al 2022;Nurdjannah et al 2014). Table 1 provides information on each.…”

Fluctuations and disparity in broiler and carcass price before during and after covid-19 pandemic in Indonesia

“…This condition can be attributed to various factors, such as changes in supply and demand, weather conditions, market speculation, and the economy. The list of commodities, such as rice, corn, chicken meat, broiler eggs, shallots, sugar, garlic, cayenne pepper, meat, red chili, and cooking oil represents a range of essential food items, each with its unique set of influencing factors [ 36 ]. Weather events, diseases, supply disruptions, and other factors have been reported to have cascading effects on crop yields and availability, leading to shortages and price increases.…”