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Dynamic Demand Analysis of India Domestic Coffee Market

Author

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  • Deodhar, Satish Y.
  • Venkatram R

Abstract

Coffee, although an important commodity in India agricultural exports, has faced fluctuating international prices and decreasing unit value realisation, especially in the post-reform period. Hence, domestic market for coffee cannot be neglected altogether. In fact, Coffee Board has proposed a promotional campaign to increase domestic demand for coffee. In this context, it becomes necessary to understand weather the emphasis should be on price incentives or nonprice factors. We estimate coffee demand for the Indian domestic market using the dynamic error-correction methodology (ECM). Results show that while demand for coffee is inelastic in the long-run, it is highly inelastic in the short-run. This suggests that Coffee Board may focus efforts on non-price factors rather than price incentives in their generic coffee promotional campaign.

Suggested Citation

  • Deodhar, Satish Y. & Venkatram R, 1999. "Dynamic Demand Analysis of India Domestic Coffee Market," IIMA Working Papers WP1999-11-05, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:wp01642
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    References listed on IDEAS

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    4. Larue, Bruno, 1991. "Farm Input, Farm Output, and Food Retail Prices: A Cointegration Analysis," Department of Agricultural Economics and Business 258676, University of Guelph.
    5. Deodhar, Satish Y. & Fletcher, Stanley M., 1998. "Dynamic Effects Of Peanut Butter Advertising On Peanut Butter Demand," Faculty Series 16702, University of Georgia, Department of Agricultural and Applied Economics.
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