Abstract

This study aims to investigate asymmetric price transmission along the supply chain in Indonesian rice market (farmer, producer, wholesaler, retailer), and use the APT information to analyze the indication of welfare transfer. NARDL is used to see the difference in speed and magnitude of price transmission. The empirical results show the presence of positive APT along the supply chain, meaning that the response to price increases is greater than price decreases. The results of the estimation of the existence of APT indicate two things. First, an indication of the existence of welfare loss from consumers. This is because consumers cannot gain profits of the same magnitude as the reduction in prices at the farm level because retailers are able to hold back prices so that they do not fall as much as the decrease in grain prices at the farm level. Second, behind consumer welfare losses , there are wholesalers who are indicated to have received the largest welfare gains among large market players along the supply chain. This comes from the welfare transfer obtained by wholesalers for their dominance, which is able to hold prices so that they do not fall as much as prices at the producer level and are able to create a better position when transacting with retailers. One of the important implications of explaining the existence of APT in this research is regarding the welfare of the farmers themselves. In this case, farmers as the first point of the supply chain do not actually receive welfare transfers from market players at different distribution levels, where in this research only positive APT was found, which indicates a greater response when there is a price increase compared to a price decrease. A decrease in prices at the farmer's point which is not fully transmitted to the consumer could be detrimental to the final consumer.