COST PASS-THROUGH IN THE U.S. COFFEE INDUSTRY

Ephraim Leibtag, Alice Nakamura (), Emi Nakamura and Dawit Zerom ()

No 7253, Economic Research Report from United States Department of Agriculture, Economic Research Service

Abstract: A rich data set of coffee prices and costs was used to determine to what extent changes in commodity costs affect manufacturer and retail prices. On average, a 10-cent increase in the cost of a pound of green coffee beans in a given quarter results in a 2-cent increase in manufacturer and retail prices in that quarter. If a cost change persists for several quarters, it will be incorporated into manufacturer prices approximately cent-forcent with the commodity-cost change. Given the substantial fixed costs and markups involved in coffee manufacturing, this translates into about a 3-percent change in retail prices for a 10-percent change in commodity prices. We do not find robust evidence that coffee prices respond more to increases than to decreases in costs.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 28
Date: 2007
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uersrr:7253

DOI: 10.22004/ag.econ.7253

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