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Competitiveness and determinants of coffee exports, producer price and production for Ethiopia

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  • Boansi, David
  • Crentsil, Christian

Abstract

The objective of this study was to analyze the performance of Ethiopia in its exports of coffee and to estimate the magnitude and effects of key economic determinants of coffee exports, producer price and production. In analyzing the competitiveness of the country in its exports of coffee, three distinct periods were considered, namely, years under the imperial regime (1961-73), under the military rule (1974-1991) and under the reformist government (1992-2010). The Revealed Comparative Advantage (RCA) and Revealed Symmetric Comparative Advantage (RSCA) measures of competitiveness were used for the analysis. Even though the results show that Ethiopia has comparative advantage in export of coffee, the same cannot be said of its overall performance on the international market owing to factors such as challenges with management of price risk, high transaction cost resulting from the extensive nature of the supply chain and the numerous actors and processes therein, challenges with quality control, low productivity of growers’ fields, and incidence of smuggling. To improve upon its export performance and to ensure continuous growth in the major strongholds of the subsector (exports, prices and production), based upon estimates for the current study, we propose investment in yield-enhancing innovations, devising and implementation of measures to improve quality control in the supply chain, address issues with price risk, minimize incidence of smuggling and more importantly minimize transaction costs. In addition, measures should be put in place to increase and ensure continuous government support to the subsector, hold onto the current devaluation of the Ethiopian birr, ensure payment of fair prices to growers and appropriately transmit future increments, increase current area under cultivation to enhance efficient utilization of the abundant labour, and to attract more export-oriented foreign direct investments (as an opportunity for trade creation).

Suggested Citation

  • Boansi, David & Crentsil, Christian, 2013. "Competitiveness and determinants of coffee exports, producer price and production for Ethiopia," MPRA Paper 48869, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:48869
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    File URL: https://mpra.ub.uni-muenchen.de/48869/1/MPRA_paper_48869.pdf
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    References listed on IDEAS

    as
    1. Boansi, David, 2013. "Export performance and macro-linkages: A look at the competitiveness and determinants of cocoa exports, production and prices for Ghana," MPRA Paper 48345, University Library of Munich, Germany.
    2. Worako, Tadesse Kumma & van Schalkwyk, Herman D. & Alemu, Zerihun Gudeta & Ayele, Gezahegn, 2008. "Producer price and price transmission in a deregulated Ethiopian coffee market," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(4), December.
    3. Thomas Vollrath, 1991. "A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 265-280, June.
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    Cited by:

    1. Leonard Leung, 2014. "Eroded Coffee Traceability and Its Impact on Export Coffee Prices for Ethiopia," Development Discussion Papers 2014-04, JDI Executive Programs.

    More about this item

    Keywords

    Competitiveness; supply chain; determinants; export; producer price; production;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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