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The impact of coffee market reforms on producer prices and price transmission

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  • Krivonos, Ekaterina

Abstract

This paper evaluates the impact of coffee sector reforms during late 1980s and early 1990s on coffee growers in the main coffee producing countries. Earlier evidence suggests that the reforms increased the share of producer prices in the world price of coffee. This hypothesis is tested in the paper with the help of cointegration analysis, and the results show that in most countries the longterm producer price share has indeed increased substantially after the liberalization. Moreover, the results suggest that the reforms induced a closer cointegrating relationship between grower prices and world market prices. Finally, estimation of an error-correction model reveals that short-run transmission of price signals from the world market to domestic producers has improved, such that domestic prices adjust faster today to world price fluctuations than they did prior to the reforms. However, there is some evidence of asymmetries in the way positive and negative world price changes are transmitted to domestic markets.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3358.

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Date of creation: 01 Jul 2004
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Handle: RePEc:wbk:wbrwps:3358

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Keywords: Payment Systems&Infrastructure; Markets and Market Access; Insurance&Risk Mitigation; Environmental Economics&Policies; Economic Theory&Research; Access to Markets; Markets and Market Access; Crops&Crop Management Systems; Environmental Economics&Policies; Economic Theory&Research;

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Cited by:
  1. Baffes, John, 2006. "Restructuring Uganda's coffee industry : why going back to the basics matters," Policy Research Working Paper Series 4020, The World Bank.
  2. Lee, Jun & Gomez, Miguel I., 2011. "Impacts of the End of the Coffee Export Quota System on International-to-Retail Price Transmission," Working Papers 126600, Cornell University, Department of Applied Economics and Management.
  3. Muradian, Roldan & Pelupessy, Wim, 2005. "Governing the coffee chain: The role of voluntary regulatory Systems," World Development, Elsevier, vol. 33(12), pages 2029-2044, December.
  4. Bussolo, Maurizio & Godart, Olivier & Lay, Jann & Thiele, Rainer, 2006. "The impact of commodity price changes on rural households : the case of coffee in Uganda," Policy Research Working Paper Series 4088, The World Bank.
  5. Sushil Mohan & Bill Russell, 2008. "Modelling Thirty Five Years Of Coffee Prices In Brazil, Guatemala And India," Dundee Discussion Papers in Economics 221, Economic Studies, University of Dundee.
  6. Kang, Hyunsoo & Kennedy, P. Lynn, 2009. "Empirical Evidences from a Coffee Paradox: An Export Supply/Price Asymmetry Approach," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 32(3), July.
  7. Mela, Giulio, 2012. "Did the Fischler reform increase market integration between the EU and world commodity markets?," Congress Papers 124107, Italian Association of Agricultural and Applied Economics (AIEAA).
  8. Félix Badolo, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," Working Papers halshs-00627189, HAL.
  9. Pierre Kohler, 2006. "The Economics of Fair Trade: For Whose Benefit? An Investigation into the Limits of Fair Trade as a Development Tool and the Risk of Clean-Washing," IHEID Working Papers 06-2007, Economics Section, The Graduate Institute of International Studies, revised Oct 2006.
  10. Krivonos, Ekaterina & Olarreaga, Marcelo, 2005. "Sugar Prices, Labour Income and Poverty in Brazil," CEPR Discussion Papers 5383, C.E.P.R. Discussion Papers.
  11. Sushil Mohan, 2007. "Market-Based Price-Risk Management for Coffee Producers," Dundee Discussion Papers in Economics 199, Economic Studies, University of Dundee.
  12. Martin Richardson & Frank Staehler, 2007. "Fair Trade," Working Papers 0709, University of Otago, Department of Economics, revised Jul 2007.
  13. Michael Atingi-Ego & Jacob Opolot & Anna Santa Drale, 2006. "Can the Benefits of Developed Country Agricultural Trade Reforms Trickle Down to the Rural Agricultural Households in Least Developed Countries: Analysis via Price Transmission in Selected Agricultura," The Institute for International Integration Studies Discussion Paper Series iiisdp159, IIIS.
  14. Durevall, Dick, 2007. "Demand for coffee in Sweden: The role of prices, preferences and market power," Food Policy, Elsevier, vol. 32(5-6), pages 566-584.
  15. Leibtag, Ephraim S. & Nakamura, Alice & Nakamura, Emi & Zerom, Dawit, 2007. "Cost Pass-Through In The U.S. Coffee Industry," Economic Research Report 7253, United States Department of Agriculture, Economic Research Service.
  16. Worako, Tadesse Kumma & van Schalkwyk, Herman D. & Alemu, Zerihun Gudeta & Ayele, Gezahegne, 2008. "Producer price and price transmission in a deregulated Ethiopian coffee market," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(4), December.
  17. Mela, Giulio & Canali, Gabriele, 2012. "EU and World Agricultural Markets: Are They more Integrated after the Fischler Reform?," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122480, European Association of Agricultural Economists.

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