2012年-世界发展银行全球_Coffee_Market_Liberalisation_and_the_Implications_for_Producers_in_Brazil_Guatemala_and_India_25页_317kb

Coffee Market Liberalisation and Its Implications for Producers in Brazil, Guatemala, and India

Core Content

This study examines the impact of coffee market liberalisation on producers in Brazil, Guatemala, and India, focusing on the relationship between world (terminal) and producer prices of coffee. It challenges the conventional approach to price modelling, which typically ignores the influence of changing government policies and market structures. The authors argue that these changes have introduced significant structural breaks in the price relationship, leading to biased estimates when using traditional models.

The paper highlights that the liberalisation of coffee markets, which began in the late 1980s following the suspension of the International Coffee Agreement (ICA) in 1989, has had a positive effect on coffee producers. This is evidenced by a higher share of the world price and increased real prices for producers in these countries.

Main Views

• Market Regulation Before Liberalisation:
  Prior to the 1990s, coffee-producing countries often regulated coffee markets to stabilize prices and ensure a minimum return to producers. These interventions were aimed at maintaining world prices and shielding producers from price volatility. However, they were generally unsuccessful in improving producer welfare due to the high cost of administered prices compared to what producers would accept in a competitive market.

• Liberalisation and Market Structure:
  The liberalisation of coffee markets involved replacing state-controlled systems with private market mechanisms. This change led to more competitive international markets and a reduction in transfer costs from producers to terminal markets. The authors argue that these reductions are not solely due to lower freight and handling costs, but also to the redistribution of economic rents in the supply chain.

• Structural Breaks and the Law of One Price:
  The study challenges the assumption that the "law of one price" holds consistently in coffee markets. This law suggests that prices in two markets should differ only by the costs of transferring goods between them. However, the authors show that structural breaks in the coffee price ratio (producer price divided by terminal price) have occurred due to changes in policies, leading to shifts in the mean of the price ratio over time.

• Empirical Evidence of Liberalisation Benefits:
  Using a two-step model that incorporates structural breaks, the authors find that the "law of one price" is strongly supported by the data after accounting for policy changes. The results indicate that the share of the terminal price received by producers has increased significantly since liberalisation, reaching around 0.85 in Brazil and India, and 0.79 in Guatemala.

Key Information

Data Overview

• Countries Studied: Brazil, Guatemala, India.
• Time Period: 1973–2007.
• Price Types: Producer price (cash price at the gate), terminal price (international market price), and transfer costs (difference between the two).
• Real vs. Nominal Prices: Real prices are adjusted using the UN index of unit values of exports or the US CPI.

Structural Breaks

• Transfer Cost Reduction: Transfer costs decreased significantly after liberalisation, from an average of 85–141 cents per pound in the 1970s to around 18–32 cents per pound in the 2000s.
• Producer Share Increase: Producers received a higher share of the terminal price in liberalised markets, indicating better returns and reduced dependency on intermediaries and government policies.

Methodology

• Two-Step Model:
  1. Bai-Perron Technique: Used to identify structural breaks in the mean of the natural logarithm of the coffee price ratio.
  2. VAR-ECM Estimation: A vector autoregressive error correction model was used to estimate the relationship between terminal and producer prices, incorporating the identified breaks.
• Equilibrium Relationship: The model assumes that the equilibrium price ratio is constant over time, and that the transfer costs are a fixed proportion of the terminal price.

Empirical Results

• Unit Root Tests: The coffee price ratio is found to be a trend stationary process, indicating that the standard cointegration approach is not appropriate.
• Law of One Price Support: After accounting for structural breaks, the data strongly supports the "law of one price", suggesting that producer and terminal prices move together in the long run.
• Producer Benefits: Producers have seen a substantial increase in real prices and output since liberalisation, with a significant rise in the share of the terminal price they receive.

Conclusion

The authors conclude that calls for re-regulation of coffee markets may be misplaced. Liberalisation has improved the returns to coffee producers by increasing their share of the world price and real prices. The study advocates for a model that incorporates structural breaks and policy changes to accurately assess the effects of market reforms on coffee prices and producer welfare.