DOI: 10.36347/sjebm.2017.v04i08.001

Pages: 463-473

The reduction of price volatility of maize is important for the economic stabilization in Indonesia, as maize serves not only as food for humans but also feed for animals. The volatility of maize price imposes risk and uncertainty on the price of chicken meat and other meats in Indonesia, affecting consequently all the economic sectors of Indonesia. Thus, this study aims to measure annual price volatility of the consumer price of maize and the factors affecting the price changes in Indonesia. Historical price volatility is measured by standard deviation in this study, and Vector Error Correction Model (VECM) is used to examine the factors affecting maize consumer price. Result shows that despite of the highest price volatility occurring in 2007, the price stabilization and self-sufficiency policy implemented in Indonesia is able to reduce price volatility of maize at consumer level in Indonesia. The main factor affecting maize consumer price is the previous maize consumer price in the short-run, while demand of maize is the main factor affecting the maize consumer price in the long-run. The implication of this study is to intensify the role of BULOG as a buffer to maize price, and aid the price stabilization policy in enhancing self-sufficiency by stablizing the consumer price of maize in Indonesia.