Coffee price dynamics: An analysis of the retail-international price margin

Atanu Ghoshray; Sushil Mohan

doi:10.1093/erae/jbab027

Coffee price dynamics: An analysis of the retail-international price margin

Research output: Contribution to journal › Article › peer-review

Abstract

We examine the dynamics of the margin between retail and international coffee prices from 1980 to 2018. We find no significant trend in the margin using a robust procedure for estimating a trend. Further, we establish that any deviations in the margin are transitory for the full sample as well as the periods prior to and after the demise of the ICA, but with asymmetric adjustment. One of the reasons for the observed asymmetry could be market concentration in the coffee supply chain at the coffee roasting level, which allows coffee roasters to keep a higher share of the profits.

Original language	English
Journal	European Review of Agricultural Economics
DOIs	https://doi.org/10.1093/erae/jbab027
Publication status	Published - 18 Jun 2021

Keywords

Coffee roasting industry
Coffee supply chain
Market power
Price dynamics
Price margin
Momentum Threshold Autoregression (M-TAR)

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10.1093/erae/jbab027

ERAE_accepted_version_4_MayAccepted author manuscript, 766 KB

Cite this

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abstract = "We examine the dynamics of the margin between retail and international coffee prices from 1980 to 2018. We find no significant trend in the margin using a robust procedure for estimating a trend. Further, we establish that any deviations in the margin are transitory for the full sample as well as the periods prior to and after the demise of the ICA, but with asymmetric adjustment. One of the reasons for the observed asymmetry could be market concentration in the coffee supply chain at the coffee roasting level, which allows coffee roasters to keep a higher share of the profits.",

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AB - We examine the dynamics of the margin between retail and international coffee prices from 1980 to 2018. We find no significant trend in the margin using a robust procedure for estimating a trend. Further, we establish that any deviations in the margin are transitory for the full sample as well as the periods prior to and after the demise of the ICA, but with asymmetric adjustment. One of the reasons for the observed asymmetry could be market concentration in the coffee supply chain at the coffee roasting level, which allows coffee roasters to keep a higher share of the profits.

KW - Coffee roasting industry

KW - Coffee supply chain

KW - Market power

KW - Price dynamics

KW - Price margin

KW - Momentum Threshold Autoregression (M-TAR)

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Coffee price dynamics: An analysis of the retail-international price margin

Abstract

Keywords

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