Distribution Channel and Pricing Pattern for Five Main Commodities Contributing to Inflation in Ternate City

Abstract

This research has four aims, namely: (1) to identify 5 major commodities contributing to inflation to Ternate City; (2) to identify the distribution channels of 5 major commodities contributing to inflation, starting from level of initial traders to consumers; (3) to identify the pricing process of 5 major commodities contributing to inflation, including profit margins; and (4) to identify the market structure of each commodity contributing to inflation.The research results found that five major commodities contributing to inflation in Ternate City are Rice, Cooking oil, Curl chilli, Sugar, and Skipjack. Distribution channels of rice and cooking oil in Ternate City are usually through two levels, namely from wholesalers and retailers or market distributors. Distribution channels of curl chilli, sugar, and skipjack fish are usually through 3 levels ie from producers, wholesalers, and retailers. The pricing for five commodities have 6 components, among others: (i) capital to buy commodities, (ii) transportation, (iii) labour, (iv) packaging, (v) other costs, and (vi) profit. The survey shows that largest average profit margin of 5 major commodities contributing to inflation of Ternate City are producer / skipjack fisherman, at 36%. For wholesalers and retailers, largest margin is sugar commodity, which amounted to 33%. This is due to skipjack and sugar are commodities with fairly large demand and price changes are very volatile. The market structure of five major commodities contributing to inflation in Ternate City generally are competitive market and oligopoly leading to quasi-competitive. The pricing power of traders and consumers is relatively balance. Nevertheless, in certain situations (such as Eid and other religious days), consumers are sometimes forced to accept a price level set by market traders. In addition, these commodities are imported goods that are generally affected by temporary shocks such as natural disturbance, harvest season, and distribution disturbances. This resulted in an oligopoly market.

Keywords: Inflation Commodities, Distribution Channels, Pricing Patterns, and Market Structure.

DOI: 10.7176/DCS/9-4-10

Publication date: April 30^th 2019