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Impact of the International Coffee Agreement's export quota system on the World's coffee market

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  • Akiyama, Takamasa
  • Varangis, Panayotis

Abstract

Ex-post simulations of the global coffee model over the recent period of operation of the International Coffee Agreement's export quota system, (1981-86) show the following. The quota system had a stabilizing effect on world coffee prices in the 1981-85 period. In 1986, when coffee prices increased sharply due to the drought in Brazil and the export quotas were suspended, prices would have been 24 percent higher in the absence of quotas over the 1981-85 period. However, the quotas have reduced export revenues (in real terms), except for such large producers as Brazil and Colombia. These countries gained form the scheme because they face very small or even zero marginal export revenues from increased exports, due to their large market shares. In projections of the coffee market, with and without the export quota system, prices would be substantially lower during the first half of the 1990s if the quota system were suspended in 1990. But prices would recover in the second half of the decade as production and exports declined in lagged response to the very low prices of the first half.

Suggested Citation

  • Akiyama, Takamasa & Varangis, Panayotis, 1989. "Impact of the International Coffee Agreement's export quota system on the World's coffee market," Policy Research Working Paper Series 148, The World Bank.
    • Handle: RePEc:wbk:wbrwps:148
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    References listed on IDEAS

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    1. Herrmann, Roland, 1986. "Free riders and the redistributive effects of international commodity agreements: The Case of Coffeee," Journal of Policy Modeling, Elsevier, vol. 8(4), pages 597-621.
    2. Newbery, David M, 1989. "The Theory of Food Price Stabilisation," Economic Journal, Royal Economic Society, vol. 99(398), pages 1065-1082, December.
    3. Akiyama, T. & Trivedi, P. K., 1987. "Vintage production approach to perennial crop supply : An application to tea in major producing countries," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 133-161.
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    Cited by:

    1. Varangis, Panos, 1989. "Coffee pricing policies in the Dominican Republic," Policy Research Working Paper Series 211, The World Bank.
    2. Gilbert, Christopher L., 1996. "International Commodity Agreements: An obituary notice," World Development, Elsevier, vol. 24(1), pages 1-19, January.
    3. Takamasa Akiyama & Larson, Donald F., 1989. "Recent trends and prospects for agricultural commodity exports in sub-Saharan Africa," Policy Research Working Paper Series 348, The World Bank.

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