COVID-19 pandemic, regional structural break and the volatility of chicken meat prices in Indonesia

ABSTRACT

The Covid-19 pandemic has shocked the demand and supply of food product leading to large price fluctuations in the market not only at the national level but also at the regional level. This paper examines the existence of structural break and the volatility of chicken meat prices in six main islands in Indonesia by using additive outlier and ARCH-GARCH models. During the Covid-19 outbreak in Indonesia, the structural break in the chicken meat prices occurred in the six islands. There were variations in terms of the timing of the structural break where Kalimantan and Java island experienced the fastest structural break. Further examinations showed that after the structural break time, the prices of chicken meat in Sumatera, Java, Sulawesi and Papua tended to increase. Meanwhile, the prices of chicken meat in Kalimantan and Bali-NT tended to decline after the break time. The Covid-19 pandemic had a significant impact on chicken meat prices in Java and Bali-NT. The results have important implications for local and central governments that are still under the Covid-19 crisis on how to attain price stabilisation of regional chicken meat prices during the Covid-19 pandemic.