Price Transmission in Ethiopia`s Coffee Value Chain = Price Transmission in Ethiopia`s Coffee Value Chain

다국어 초록 (Multilingual Abstract)

Coffee has been and still remains the leading cash crop and export commodity of Ethiopia. In this study, we reviewed the coffee marketing and supply chain with the purpose of analyzing the pattern of price transmission between world price and producer prices. An Error Correction Model (ECM) was employed to analyze the pattern of price transmission between world price and producer prices focusing on both the long-run and short-run adjustments. Data on producer and world coffee prices from 1998/99.2011/12 were used for the analysis. The results revealed that the long-run relationship between world and domestic (producer) prices was significant implying that Ethiopian coffee market is well integrated into the international market. We also found that the Granger causality runs from producers to the global markets and not the reverse. This implies that prices are determined at the farm-gate and are then passed on to the export market. Furthermore, the short-term price transmission dynamics was found to be asymmetric with regard to adjustments towards the long-run equilibrium.