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Journal : AGROMIX

Comparison of crude oil price transmission to food commodities for biofuel source and non-biofuel source Wijayati, Prasmita Dian; Rachmadhan, Aditya Arief; Rizkiyah, Noor

Publisher : Fakultas Pertanian Universitas Yudharta Pasuruan

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.35891/agx.v15i2.4429

Abstract

Introduction: World crude oil prices are linked to food commodity prices as input costs for the production distribution and development of biofuels. The relationship between increasing crude oil prices and food prices is in one way; i.e. an increase in world crude oil prices will trigger an increase in food prices and not the other way around. This study aimed to analyze and compare price transmission and integration of cross-commodity prices between the price of crude oil and the price of corn (raw material for biofuels) and the price of rice (non biofuels raw material). Methods: This study used the VARX (Vector Autoregression with Exogenous variables) method with corn prices and rice prices as the endogenous variables, while crude oil prices as exogenous variables. Results: Price transmission and integration of cross-commodity prices occur in crude oil to corn commodities. In contrast, there was no price transmission and price integration between crude oil and rice. Commodities that are directly related to the development of biofuels experience a more significant impact on price changes. Conclusion: Energy commodity prices are connected to food commodity prices, particularly corn. Therefore, if crude oil price rises, so does the corn. Highly dependent corn-importing countries have to be aware. Measures engendering food security are key to any country, particularly promoting domestic production and improving food storage and distribution systems to reduce the risk of food price spikes. The policy implications emerging from the one-directional causality between oil and food prices would typically depend on the specific nature of the two markets and the goals of policy intervention.
Comparison of crude oil price transmission to food commodities for biofuel source and non-biofuel source Wijayati, Prasmita Dian; Rachmadhan, Aditya Arief; Rizkiyah, Noor
AGROMIX Vol 15 No 2 (2024)
Publisher : Fakultas Pertanian Universitas Yudharta Pasuruan

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.35891/agx.v15i2.4429

Abstract

Introduction: World crude oil prices are linked to food commodity prices as input costs for the production distribution and development of biofuels. The relationship between increasing crude oil prices and food prices is in one way; i.e. an increase in world crude oil prices will trigger an increase in food prices and not the other way around. This study aimed to analyze and compare price transmission and integration of cross-commodity prices between the price of crude oil and the price of corn (raw material for biofuels) and the price of rice (non biofuels raw material). Methods: This study used the VARX (Vector Autoregression with Exogenous variables) method with corn prices and rice prices as the endogenous variables, while crude oil prices as exogenous variables. Results: Price transmission and integration of cross-commodity prices occur in crude oil to corn commodities. In contrast, there was no price transmission and price integration between crude oil and rice. Commodities that are directly related to the development of biofuels experience a more significant impact on price changes. Conclusion: Energy commodity prices are connected to food commodity prices, particularly corn. Therefore, if crude oil price rises, so does the corn. Highly dependent corn-importing countries have to be aware. Measures engendering food security are key to any country, particularly promoting domestic production and improving food storage and distribution systems to reduce the risk of food price spikes. The policy implications emerging from the one-directional causality between oil and food prices would typically depend on the specific nature of the two markets and the goals of policy intervention.
Co-Authors Adela Silviana Siska Adelia Regina Putri Agrita Retno Sinansari Alda Sylvia K Alia Replica Ma’arif Andhu Ismail Aziza Andriani, Catherine Annisa Lailatul B Antonius Dian Kurnianto Archadea, Cawla Arum, Dewi Puspa Arya Rahman Rizaldi Aryani, Gisca Sabrina Dwi Ayu Cahyasusanti Budiwitjaksono, Gideon Setyo Cawla Archadea Daniswara Adyatma, Muhammad Dava Praya Syafa Kurniawan Desilva, Melati Putri Dian Anggraini Dimas Aditya Rama Dita Atasa Dona Wahyuning Laily Dyah Firdausi Nuzuliyani Dyan Fransiska Agata Eko Purwanto Elvin Syah Huzaimi Ervia Okta Izzatul M Fabiyola, Rizcha Oktanza Faiqoh, Nadya Kamilia Fatchur Rozci Fauziah, Diana Maharani Firnanda, Fida Dea Fitri Diani Furuhita, Fitri Aulia Gideon Setyo Budi Witjaksono Hamidah Hendrarini Hania Putri Amalia Herry Nur Faisal Herry Nur Faisal, Herry Nur Hidayat, Sophia Mikyal Ida Syamsu Roidah Idhoh Fitriana, Nisa Hafi Indra Tjahaja Amir Irma Tiara Ekayasah Ivan Kurniawan K, Alda Sylvia Laksmi Diana Masfiroh, Sintia Cindy Melati Putri Desilva Melinda Aprilia Putri Mirza Andrian Syah Mochammad Iskandar Zulkarnain Mohammad Rizqy Mu'iz, Mochammad Abdul Mubarokah Mubarokah Mufidah, Norma Muhammad Azriel Yahya Nadhif Syathiril Anwar Nadya Kamilia Faiqoh Niazi, Talitha Naila Ningrum, Anisa Sulistya Niswatin Kholifatus Sholikah Nuhfil Hanani Nur Azizah Azzahra Nurfarisa Yuristya Nurkhalishah, Tiara Dita Nurul Nurul Nuryananda, Praja Firdaus Nuzuliyani, Dyah Firdausi Oktavyan Dwi Irianto Pangestuti, Sofia Rahayu Praja Firdaus Nuryanda Prasasti, Yeni Prasmita Dian Wijayati Putra, Achmad Syaifulloh Putri, Melinda Aprilia Raafi Ramadhan Alamsyah Rachmadhan, Aditya Arief Rafli Maulana Mawardi Rahmazya Putri, Chindy Nabila Ramadhan, Akmal Nugraha Rico Yanuar Ardiansyah Rico Yanuar Ardiansyah Risqi Firdaus Setiawan Rizkyah, Salsabillah Alif Robby Anjarwanto Rozchi, Fatchur Sari, Putri Nurmalita Shofiyah Shofiyah Siska, Adela Silviana siti winarsih Soedarto, Teguh Sofiyah Sofiyah Sri Tjondro Winarno, Sri Tjondro Sri Widayanti Surya Lang Itan Syafrial Syafrial Syarif Imam Hidayat TAUFIK SETYADI Teguh Soedarto Tondang, Ika Sari Tria Mei Hidayati Wahyu Santoso Wahyuni, Febriani Tri Yeni Prasasti Yuristya, Nurfarisa Zuhri, Gideon Setyo Abuzar