Price Transmission in Ethiopia's Coffee Value Chain

초록

Coffee has been and still remains the leading cash crop and exportcommodity of Ethiopia. In this study, we reviewed the coffee marketing andsupply chain with the purpose of analyzing the pattern of price transmissionbetween world price and producer prices. An Error Correction Model(ECM)was employed to analyze the pattern of price transmission between worldprice and producer prices focusing on both the long-run and short-runadjustments. Data on producer and world coffee prices from 1998/99-2011/12were used for the analysis. The results revealed that the long-run relationshipbetween world and domestic (producer) prices was significant implying thatEthiopian coffee market is well integrated into the international market. Wealso found that the Granger causality runs from producers to the globalmarkets and not the reverse. This implies that prices are determined at thefarm-gate and are then passed on to the export market. Furthermore, theshort-term price transmission dynamics was found to be asymmetric withregard to adjustments towards the long-run equilibrium.

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