Price Adjustment and Market Power in the Colombian Milds Coffee Market

Xi-Le Li and Sayed H. Sanghain

Journal of Agribusiness, 2015, vol. 33, issue 01

Abstract: The coffee industry has been characterized by a few large buyers as well as lower and more volatile producer prices since the 1990s. This paper investigates the price adjustment between producer and world coffee prices along the supply chain of coffee. The results show that the producer price and the world price are adjusted asymmetrically and the causality is unidirectional from the world price to the producer price. Market power, a possible explanation for the asymmetric price adjustment, significantly affects the price relationship between upstream and downstream prices. These results have important implications for policy-makers and producers. Better organization of coffee producers can increase their bargaining power with the buyers in the market, which may result in higher prices at the farm level.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jloagb:311370

DOI: 10.22004/ag.econ.311370

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