Analysis of the world coffee market
Akiyama, T | Duncan, R. C
This paper reports the results from a new world coffee econometric model constructed to project consumption, output and price over the next decade. The projections are based on econometric analysis of coffee demand and production in major consuming and producing countries and regions. The results indicate a pessimistic outlook for the growth in consumption and price, with stagnating demand in the United States (the largest consuming country) and future demand in Western Europe highly dependent on income growth, while being under competitive pressure from substitutes such as fruit juices and soft drinks. Prices are expected to decline towards the middle of the decade, under pressure from increasing output. The output increases are a result of the planting responses to the high prices of 1976-77. Coffee prices should recover towards the end of the decade as the rate of growth of production declines. Simulations of the model are carried out to show the susceptibility of coffee prices and export revenues to increases in production at rates faster than the growth in demand resulting from population and income increases.
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