Abhinav, M C
Coffee economy of Kerala-an analytical study - Vellanikkara Department of Agricultural Economics, College of Agriculture 2021 - 261p.
PhD
Coffee is considered as the favourite drink of civilized world and the second
largest traded commodity after petroleum. For many nations in the tropic, coffee is
a major source of foreign exchange. India is the third largest producer and exporter
of coffee in Asia. The trade liberalization policies have brought challenges as well
as opportunities for plantation crops including coffee because of the increased
integration of the country with the world, with serious implications for price
stability and trade competitiveness.
In this context, the present study was undertaken with the objectives; to study
economics of coffee cultivation and marketing, asses the implications of changes
in prices at farm level and constraints in production, analyse the price behaviour,
formation and transmission between Indian and international markets, study the
magnitude and determinants of volatility in prices of coffee and analyse India’s
export performance and competitiveness in coffee trade.
The total cost of cultivation and production of coffee in Kerala state were
estimated as ₹1,51,877 per hectare and ₹67 per kg respectively, while the net return
was worked out as ₹41,652 per hectare. The major marketing channels identified
for coffee were, Channel I: Farmer-Wayanad Social Service Society (WSS) -
Consumer; Channel II: Farmer-Village Trader-Wholesaler- Up-country
Wholesaler-Retailer-Consumer; Channel III: Farmer-Brahmagiri Development
Society-Consumer (BDS); Channel IV: Farmer-Exporter-Consumer and Channel
V: Farmer-Exporter-Export Agent-Consumer. Majority of the farmers (52 per cent)
sold their produce to the WSS, while 21 per cent farmers sold to village traders. The
marketing efficiency was relatively high in channel I because of the highest
producer’s share in consumer’s rupee, while it was lowest in channel V.
The changes in farmgate prices of coffee influence the farm level decisions
of coffee farmers by affecting their decisions on inputs, special benefits provided
to farm labourers, health care expenses, savings and borrowings. Among the
ii
constraints faced by coffee farmers, low farmgate price, climatic issues and lack of
irrigation facilities were critically constraining coffee cultivation in Kerala.
The intra-annual volatility of Indian and international monthly prices of
coffee declined marginally in period II and III, while the inter-annual volatility of
Indian and international monthly prices of coffee increased in period II and III. The
results of the instability analysis in annual coffee prices showed that the magnitude
of volatility indices have increased in period II, while it decreased in period III. The
determinants of price volatility of coffee were identified as production and
consumption at national level, Rupee-US Dollar exchange rate and climatic factors
such as temperature, rainfall and relative humidity.
The co-movement between the coffee prices in the Indian and international
markets was confirmed in period I, II and overall periods, while there was decreased
integration in period III. The Error Correction Model (ECM) indicated the presence
of short-run disequilibrium between the Indian and international prices, which got
corrected with varying speeds of adjustment. The Granger causality tests confirmed
that the price transmission was from international market to Indian market in the
long-run.
The rate of growth and instability in coffee export decreased in the post-WTO
period as compared to the pre-WTO period. The export unit value contributed
108.20 per cent growth in the export value of coffee between pre- and post-WTO
period. Nearly 83 per cent of change in the export value variance between pre- and
post-WTO period was found to be due to the changes in the variability of export
unit value variance.
The geographic concentration of coffee exports from India was high in preWTO period, while it decreased in the post-WTO period. There was a changing
pattern in the stable export markets for Indian coffee and Germany, Italy and, Japan
were found to be the most stable markets in the post-WTO period. The Nominal
Protection Coefficient (NPC)) was greater than one (1.25) in the post-WTO period,
indicating lower export competitiveness of Indian coffee.
iii
The challenges in coffee cultivation can be addressed by implementing
awareness programmes on optimal input usage and providing irrigation
development subsidy to the farmers. A market intelligence system with the crop
specific price stabilization mechanism is needed to tackle the high volatility in
coffee prices. A stable income for coffee farmers could be ensured by value addition
and branding of coffee at the farm level or in cooperative lines. More transparency
is required in the marketing channels to reduce the asymmetric information flow to
the farmers. In order to promote the export and improve India’s competitiveness,
farmers should be encouraged to produce high quality coffee at reduced cost and
the country also needs to formulate trade policies for stable export markets and
develop strategies for entry into non-traditional export markets.
Agricultural Economics
Coffee
Parkinson's index
Cointegration test
Coppock's instability index
630.33 / ABH/CO PhD
Coffee economy of Kerala-an analytical study - Vellanikkara Department of Agricultural Economics, College of Agriculture 2021 - 261p.
PhD
Coffee is considered as the favourite drink of civilized world and the second
largest traded commodity after petroleum. For many nations in the tropic, coffee is
a major source of foreign exchange. India is the third largest producer and exporter
of coffee in Asia. The trade liberalization policies have brought challenges as well
as opportunities for plantation crops including coffee because of the increased
integration of the country with the world, with serious implications for price
stability and trade competitiveness.
In this context, the present study was undertaken with the objectives; to study
economics of coffee cultivation and marketing, asses the implications of changes
in prices at farm level and constraints in production, analyse the price behaviour,
formation and transmission between Indian and international markets, study the
magnitude and determinants of volatility in prices of coffee and analyse India’s
export performance and competitiveness in coffee trade.
The total cost of cultivation and production of coffee in Kerala state were
estimated as ₹1,51,877 per hectare and ₹67 per kg respectively, while the net return
was worked out as ₹41,652 per hectare. The major marketing channels identified
for coffee were, Channel I: Farmer-Wayanad Social Service Society (WSS) -
Consumer; Channel II: Farmer-Village Trader-Wholesaler- Up-country
Wholesaler-Retailer-Consumer; Channel III: Farmer-Brahmagiri Development
Society-Consumer (BDS); Channel IV: Farmer-Exporter-Consumer and Channel
V: Farmer-Exporter-Export Agent-Consumer. Majority of the farmers (52 per cent)
sold their produce to the WSS, while 21 per cent farmers sold to village traders. The
marketing efficiency was relatively high in channel I because of the highest
producer’s share in consumer’s rupee, while it was lowest in channel V.
The changes in farmgate prices of coffee influence the farm level decisions
of coffee farmers by affecting their decisions on inputs, special benefits provided
to farm labourers, health care expenses, savings and borrowings. Among the
ii
constraints faced by coffee farmers, low farmgate price, climatic issues and lack of
irrigation facilities were critically constraining coffee cultivation in Kerala.
The intra-annual volatility of Indian and international monthly prices of
coffee declined marginally in period II and III, while the inter-annual volatility of
Indian and international monthly prices of coffee increased in period II and III. The
results of the instability analysis in annual coffee prices showed that the magnitude
of volatility indices have increased in period II, while it decreased in period III. The
determinants of price volatility of coffee were identified as production and
consumption at national level, Rupee-US Dollar exchange rate and climatic factors
such as temperature, rainfall and relative humidity.
The co-movement between the coffee prices in the Indian and international
markets was confirmed in period I, II and overall periods, while there was decreased
integration in period III. The Error Correction Model (ECM) indicated the presence
of short-run disequilibrium between the Indian and international prices, which got
corrected with varying speeds of adjustment. The Granger causality tests confirmed
that the price transmission was from international market to Indian market in the
long-run.
The rate of growth and instability in coffee export decreased in the post-WTO
period as compared to the pre-WTO period. The export unit value contributed
108.20 per cent growth in the export value of coffee between pre- and post-WTO
period. Nearly 83 per cent of change in the export value variance between pre- and
post-WTO period was found to be due to the changes in the variability of export
unit value variance.
The geographic concentration of coffee exports from India was high in preWTO period, while it decreased in the post-WTO period. There was a changing
pattern in the stable export markets for Indian coffee and Germany, Italy and, Japan
were found to be the most stable markets in the post-WTO period. The Nominal
Protection Coefficient (NPC)) was greater than one (1.25) in the post-WTO period,
indicating lower export competitiveness of Indian coffee.
iii
The challenges in coffee cultivation can be addressed by implementing
awareness programmes on optimal input usage and providing irrigation
development subsidy to the farmers. A market intelligence system with the crop
specific price stabilization mechanism is needed to tackle the high volatility in
coffee prices. A stable income for coffee farmers could be ensured by value addition
and branding of coffee at the farm level or in cooperative lines. More transparency
is required in the marketing channels to reduce the asymmetric information flow to
the farmers. In order to promote the export and improve India’s competitiveness,
farmers should be encouraged to produce high quality coffee at reduced cost and
the country also needs to formulate trade policies for stable export markets and
develop strategies for entry into non-traditional export markets.
Agricultural Economics
Coffee
Parkinson's index
Cointegration test
Coppock's instability index
630.33 / ABH/CO PhD