Seizing Agro-commodities competitiveness through Local Auction Markets

What is Agrobusiness Auction Markets?

Auction market is a market in which buyers enter competitive bids and sellers enter competitive offers at the same time. Meanwhile, agribusiness auction market is a place which matchs bid and offers of respective customer and farmer on dealing agro-commodities. The agro-products are such as: cucumber, soybean, rice, chili, garlic, pepper, cattles, vegetable and essential oil, and so forth. According to UKM DIY (2014), there are two kinds of the markets based on the characteristics which are as follows: a. Spot auction market: farmers directly bring their agro-commodities which will be sold to the markets. b. Forward auction market: farmers sufficiently bring the examples of commodities with agro-products specification to costumers. It is known as physical market due to an obligation to give the products in the line of the determined price, quality, quantity and time.

Auction market is intended redundantly to help farmers outing of unfair price accepted by initial farmers and paid by consumers. In addition, auction market have been proven able to create better trading system via transparency of price determination; to enhance efficiency and effectiveness of trading system; and to embody incentive for increasing the productivity and quality as well as income of farmers. As pertaining the market, it is not far from the kinds of institution. Damona et al. (2013), institutional concept of auction market is the organizer of agro-commodities trading in which price discovery efforts will be open, transparent and the best; providing value protection; and increasing the efficiency of trade. So, auction market is institutionally and technically able to seize the competitiveness of agro-commodities in Indonesia. In Indonesia, there are some young energitic agriculturists who have been started to implement the market as integral ways of their agrobussineses. The markets considerably have assisted Indonesia young people on agriculture to expand their entepreneurships by defining prices. The youths sell out their agro-commodities directly to consumers without interupted by any discrepancy.

Why are the markets expanded in Indonesia? Nowdays, auction markets has been implemented in Indonesia agricultural sector. It ensues due to the gap of unfair of price that accepted by producer farmers by prices paid by the final consumer. Furthermore, the markets have been extended and expanded locally to other cities because of positive effects gained. The market is developed at certain regions of Indonesia because it is able to shorten the stream of trading; to give the certainty of price, quality and quantity as well as time; and to be the best way to store agrobusiness commodities not costly. For instance, the markets have been implemented permanently in Bali and Yogyakarta, Surabaya, and interimly in several cities of Indonesia –Kediri and Medan. According to Pemuda Wirausaha (2014), there are 13 provinces of Indonesia which harbor auction markets which are: Sumatera Barat, Jambi, Lampung, Jawa Barat, Jawa Tengah, DI Yogyakarta, Jawa Timur, Bali, Sulawesi Utara, Gorontalo, Sulawesi Selatan, Sulawesi Tenggara, and Nusa Tenggara Barat. As we reviewing the regions which implement the market permanently is close to traditional culture in which we know that both Bali and Yogyakarta harbors rich traditional cultures, tending to link on economic, social and ecological aspects. As reviewed of the perspectives of Indonesian young agriculturists who are utilized the markets, the markets are such potential to be evolved daily due to uncounted benefits. These benefits are in form of defining price wisely, avoiding price gap between consumers and young ariculturists sold out the agro-commodities, and increasin the competitiveness. Novelty of Auction Market! The increasing of technology of communication and information, Indonesia government has provided an online mechanism for selling agro-commodities of farmers. The online system is known as E-auction market (Bahasa Indonesia: E-pasar Lelang) in form website and social media use, and it is more efficient and not costly over selling directly on the spot. It is so useful for assist producer or farmers in looking for better and more efficient market. In addition, the online system helps enhance demand of consumers towards agro-commodities. E-pasar lelang has been applied by Department of Trade of West Java and Bali.

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