Egg Market Integration and Financial Feasibility Laying Hens Farmer in Central Java, Indonesia

The research aims to determine the degree of chicken egg market integration, determine the price asymmetric and determine the financial feasibility of chicken egg business in Central Java, Indonesia. Secondary data from January 2017- December 2019 was used for research. Survey research was conducted on 100 (one hundred) laying hens farmers. The research study was conducted in Semarang city, Kendal regency and Semarang regency. Johansen test, Pearson correlation and Granger Causality test were used in this study. Financial feasibility analyses such as investment, payback period (PP), net present value (NPV), Internal Rate of Return (IRR), Return on Investment (ROI), and Benefit-cost (B/C) ratio are used in this study. The result showed there was a positive correlation between the Price in Kendal Regency and Semarang City. Increasing prices in Semarang City caused the increasing Price in Kendal regency vice versa. There was a marketing integration between Semarang city and Kendal regency, and Granger Causality showed Price in Semarang city influenced the Price in Kendal regency and Semarang regency. The price of chicken eggs in Semarang city, Kendal regency, and Semarang city were symmetric. Based on the calculation


DATA ANALYSIS
Descriptive statistics include mean, standard deviation, coefficient of variation, and price correlation coefficients were computed. To determine the correlation between one market to another market used the Pearson Correlation analysis [19]. Price transmission to choosing causal between central market price extends to another, and the speed at which the price changes occur at a given market is also reflected at other market levels [11]. The the Augmented Dickey Fuller (ADF) tstatistic was applied to test the hypothesis of a unit root in series, was illustrated as follows: (Franken et al., 2005) (Gelli et al., 2017) The null and alternative hypotheses were still the same. The Dickey-Fuller (DF) test is just the special case of the ADF test. The ADF Test is carried out in the same way as the DF test (Sofyan et al., 2019).
The econometric analysis of the chicken egg price transmission identifies which marketing levels (or location) played an important role in determining chicken egg prices. These concerns established the direction of a causal relationship in chicken egg prices in the vertical (or spatial) marketing system. The causal direction between different price levels and between spatial markets was tested empirically using pairwise Granger causality tests by estimating the following equations (Sofyan et al., 2019) Between wholesale and retail prices of chicken egg: Model 1: In the same way, the equations that were used to test the causality relationships between spatial markets, for example, between regions X and Y, are as follows: Model 1: (Longworth et al., 2019) Model 2: (Mafimisebi, 2012) Where Xt and Yt are the monthly wholesale prices of the chicken egg at regions X and Y at time t, the other variables are defined in the same way as previously described. A statistically significant F-statistic to be obtained in both directions of causation would suggest a feedback relationship between markets, which means that shocks are coming from the reference or base market influence pricing in the other markets (Sofyan et al., 2019).

The Law of One Price (LOP)
To tested LOP the he Engle-Granger Test is a Dickey-Fuller Test applied (Sofyan et al., 2019) to the residuals ( t e ) of the cointegrating equation but with some modifications. The test equation was: (Mahmoud et al., 2005) where vt is a white noise. The null and alternative hypotheses are: The LOP was computed to determine if the price in one market was symmetric or not with another market.

Pearson correlation
Pearson correlation is used to determine the relationship between prices in market x and prices in market Y. A strong correlation indicates that markets x and Y are integrated with each other. (Marks, 2010)

Granger causality test
The Granger causality test is used to find out which markets affect other markets (Yazdani et al., 2013).

Financial Feasibility
Financial feasibility is calculated to find out how much investment is invested, then the investment criteria of the investment are PP, IRR, NPV, ROI, and B/C ratio (Zhao et al., 2021).

RESULTS AND DISCUSSION Degree of Chicken Egg Market Integration
The chicken egg price in Central Java province fluctuated during 2017-2019 after deflated with the consumer price index (CPI). The average chicken egg retail price reached its peak at IDR. 25,000/kg in the Semarang city, and the lowest Price was IDR. 19,000 /kg). The Semarang city is an importing region since it does not produce many layer chickens. The Price in Semarang regency the highest Price was IDR 23,000/kg, and the lowest price was 17,500. The highest price of chicken egg in Kendal regency was IDR 22,000, and the lowest Price was IDR 17,000. The price fluctuations of chicken eggs are presented in table 1. The price of chicken eggs which is quite high in value is due to fluctuations in demand and supply in the province of Central Java. When the demand for eggs is high, such as during religious holidays, it will trigger an increase in egg prices.  (Longworth et al., 2019). Further, they stated milk price in producer area more fluctuated than milk price in the consumer area. The high CV shows that the mechanism of supply and demand for chicken eggs in Central Java is very high, this causes the price of chicken eggs to rise and fall rapidly.
As shown in Table 2, there was a strong correlation between price in producer and consumer areas. Increasing price in consumer area tends to increased price in producer area. A strong correlation between beef cattle producers and Central Java consumers [19]. Increasing price in consumer area would follow the increasing price in producer area no longer than two months. The results in agreement with Longworth et al (2019) which stated there was a strong correlation between price in producer area and consumer area in Dutch. Increasing number of egg demand would increase the egg price in producer area.  As shown in figure 3. The chicken egg price in Semarang city fluctuated. The highest price of its was in June and December, and the lowest price was in October. The price was high during the Idul Fitri Moslem festival and Christmas Festival. The increasing price of chicken egg triggers the more supply to consumer area. To test the degree of market integration using ADF test. Testing ADF test findings that all of the chicken egg market were stationary ( Table 3). All of the market observed was stationary. As shown in Table 4. Kendal regency and Semarang city was integrated. The differences price just only in transaction cost. Semarang city and Semarang regency was also integrated, and Semarang regency and Kendal regency was integrated also. Increasing price in one market would follow the increasing price in other market. This result in agreement with existing research (Longworth et al., 2019). They found increasing milk price in one market would also follow increasing price in another market.  Table 4. There was a cointegration between chicken egg prices in Semarang city, Kendal regency, and Semarang regency. Price of chicken egg in Kendal and Semarang city was integrated, price of chicken egg in Semarang regency and Semarang city was integrated and price of chicken egg in Semarang regency and Kendal regency was integrated.

ASYMMETRIC PRICE
As shown in Table 5, the cointegrating vector of producer area and consumer area were cointegrated. The price of chicken egg in Semarang city was the price of chicken egg in Kendal plus transaction cost. The price of chicken egg in Semarang city was the chicken price in Semarang regency plus transactional cost, and the price of chicken egg in Semarang regency was the price of chicken egg in Kendal plus transactional cost. They were increasing the transactional cost such as transportation cost, wholesale profit. Etc would tend to increase the price of chicken eggs in the consumer area. Semarang city = Semarang regency +c2 3 Semarang regency = Kendal +c3 Source: Primary Data Processed As shown in Table 6, Semarang city caused the price of chicken egg in Kendal and Semarang regency. The high demand for chicken eggs in Semarang city as a consumer area would attract more product supply from the producer area.  The Price in Semarang city, Kendal regency, and Semarang regency were symmetric. The Increase in Price in Semarang city would follow by increasing Kendal regency in less than one month, so we can conclude that LOP happened between two markets. The price of chicken egg in Semarang city was symmetric with the price of chicken egg in Semarang regency. So LOP happened between two markets. The price of chicken egg in Semarang regency was symmetric with the price of chicken egg in Kendal regency. So LOP happened between two markets. The distance between producer and consumer areas was near. When the price of chicken egg in Semarang city increased, the price easily transmitted to Semarang regency and Kendal regency. Number of respondents 100 Source: Primary Data Processed As shown in table 8. The average ownership of laying hens is 4300 heads with a daily production of 233 kg. Laying hens have an average age of 45 years with 14 years of experience. Laying chicken breeders in Central Java have on average had quite a long time in managing laying hens, this causes the laying hens business to be sustainable. Most of the breeders are graduates of senior high school so they are able to receive knowledge and absorb knowledge and changes from outside.

BUSINESS FEASIBILITY
As shown in table 9, to raise 4300 laying hens requires an investment of 478,000,000. Based on the calculation of the income and expenditure assumptions issued by the farmer, the PP value for 1 year and 11 months will be obtained, the NPV is IDR 820,000,000, the IRR is 62%, the ROI is 58% and the B/C ratio is 2.48. Based on these calculations, laying hens business in Central Java Indonesia is feasible to implement.

CONCLUSION
The market among producer area and consumer area in Central Java were integrated. The correlation between price in producer area and consumer area were highly integrated. Increasing the price in the consumer area would follow by increasing the price in the producer area. The Price in Semarang city influenced the Price in Kendal regency and Semarang regency. The Price in Semarang city, Kendal regency, and Semarang regency were symmetric. The government in Central Java should manage the Price in Semarang city to stabilize the price of chicken eggs in Central Java. The laying hens business in Central Java, Indonesia, is feasible.

RECOMMENDATION
According to the results of study, the Central Java Government should be have proper regulation to save the chicken farming. Price of egg always fluctuated because many oligopoly firms influence the egg price. Regulation of the government would create egg price stability.