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The International Coffee Agreement: a Tax on Coffee Producers and Consumers?

Author

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  • Bohman, Mary
  • Jarvis, Lovell

Abstract

The International Coffee Agreement (ICA) used export quotas to restrict coffee trade in order to increase and stabilize the international price. A model of domestic pricing policy is developed which shows that the producer price should have fallen in response to ICA quotas. Econometric analysis supports the hypothesis that use of quotas resulted in lower producer prices in most coffee producing countries. The income lost by producers was largely captured by governments and/or exporters to whom the governments assigned quota rights. Since coffee is produced by small farmers in most exporting countries, income distribution within those countries probably worsened.

Suggested Citation

  • Bohman, Mary & Jarvis, Lovell, 1999. "The International Coffee Agreement: a Tax on Coffee Producers and Consumers?," Working Papers 190921, University of California, Davis, Department of Agricultural and Resource Economics.
  • Handle: RePEc:ags:ucdavw:190921
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    File URL: http://purl.umn.edu/190921
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    References listed on IDEAS

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    1. Bohman, Mary & Jarvis, Lovell & Barichello, Richard, 1996. "Rent Seeking and International Commodity Agreements: The Case of Coffee," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 379-404, January.
    2. Irving B. Kravis, 1968. "International Commodity Agreements to Promote Aid and Efficiency: The Case of Coffee," Canadian Journal of Economics, Canadian Economics Association, vol. 1(2), pages 295-317, May.
    3. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-271, September.
    4. Gersovitz, Mark & Paxson, Christina H, 1992. "Institutional and Intertemporal Influences on the Trade of Developing Countries," American Economic Review, American Economic Association, vol. 82(2), pages 180-185, May.
    5. Gilbert, Christopher L., 1996. "International Commodity Agreements: An obituary notice," World Development, Elsevier, vol. 24(1), pages 1-19, January.
    6. Herrmann, Roland, 1986. "Free riders and the redistributive effects of international commodity agreements: The Case of Coffeee," Journal of Policy Modeling, Elsevier, vol. 8(4), pages 597-621.
    7. McMahon, Gary, 1989. "The income distribution effects of the Kenyan coffee marketing system," Journal of Development Economics, Elsevier, vol. 31(2), pages 297-326, October.
    8. Herrmann, Roland, 1987. "Uncontrolled prices on a market with supply control," Economics Letters, Elsevier, vol. 23(2), pages 129-133.
    9. Cardenas, Mauricio, 1994. "Stabilization and redistribution of coffee revenues: A political economy model of commodity marketing boards," Journal of Development Economics, Elsevier, vol. 44(2), pages 351-380, August.
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    Cited by:

    1. Jarvis, Lovell S., 2003. "How Brazil Transferred Billions To Foreign Coffee Importers: The International Coffee Agreement, Rent Seeking And Export Tax Rebates," Working Papers 11967, University of California, Davis, Department of Agricultural and Resource Economics.
    2. Jarvis, Lovell S., 2005. "The rise and decline of rent-seeking activity in the Brazilian coffee sector: Lessons from the imposition and removal of coffee export quotas," World Development, Elsevier, vol. 33(11), pages 1881-1903, November.

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