Integration of Indonesian Coffee Markets with World Coffee Markets

This study aims to analyze the integration of the Arabica and Robusta coffee markets in Indonesia with world coffee prices. The study uses secondary data in the form of annual time series data during the period 1985 - 2015. The study uses the VECM analysis method. This method explains the relationship of long-term dynamic equilibrium and short-term equilibrium in a system of equations. The analysis shows that Indonesian and world Arabica coffee is not integrated in the long term or the short term. In Robusta coffee VECM estimation analysis shows that there is a significant value at the 10% level in a long-term relationship with a value of 0.08579, which means that there is a short-term relationship between world Robusta coffee prices and domestic Robusta coffee prices in the previous year, but no relationship in the long run.

Integration of Indonesian coffee markets and world coffee markets

This study aims to analyze the integration of the Arabica and Robusta coffee markets in Indonesia and world coffee prices. The study uses secondary data in the form of annual time series data from 1985-2015. The study uses the VECM analysis method. This method explains the relationship between long-term dynamic and short-term equilibrium in a system of equations. The analysis shows that Indonesian and world Arabica coffee did not integrate into the long term or the short term. In Robusta coffee, VECM estimation shows that there is the significant at the 10% level in a long-term relationship with a value of 0.086. It means that there is a short-term relationship between world Robusta coffee prices and domestic Robusta coffee prices in the previous year, but no relationship in the long run.

Contesting Indonesia’s Single Origin Coffee Market: A Dynamic Capabilities Perspective

Coffee is a commodity that has high value and great demand, then it supply chain tends to be monopolized by big actors certainly for single origin coffee bean. However, increasing number of local coffee shops and consumer awareness of consumed goods, and the emergence of more conscious consumer groups of “coffee lovers” or “connoisseur’s consumers”, sparks an intesive competition among market actors in local level that influence such dominance. This study aims to employ the dynamic capabilities theories (DCs) to analyze how the market actors, namelysmall traders, wholesalers, certified companies, and coffee shop owners build a strategy to secure their coffee supply amidst the tight competition.Selecting the coffee markets in Dampit District, East Java, Indonesia, we find the actors fighting for social space to win the competition by building network, dependency, and legitimacy. Actors build capabilities based on the internal potential to identify opportunities, take the opportunities, and utilize them to transform business organizations to survive rapid environmental changes. Not just looking at dominance behaviors as how it is in the case of asset-based approach, DCs provide a more balanced perspective between the entrepreneur's capacity and asset control. Detailed research to see each actor builds long term strategies is needed in the future to describe in more detail their strategy in maintaining their business sustainability in the more competitive busisness environment.