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Traceability, value, and trust in the coffee market: A natural experiment in Ethiopia

Author

Listed:
  • Ludovic Mbakop

    (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus via Mersin 10, Turkey)

  • Glenn Jenkins

    (Queen's University)

  • Leonard Leung

    (Asian Development Bank, Manilla, The Philippines)

  • Kamil Sertoglu

    (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus via Mersin 10, Turkey)

Abstract
This study measures the impact of traceability attributes on international buyers’ willingness to pay for coffee produced in Ethiopia and the impact of accurate information on the production location of the coffee on the pricing according to its type and grade. Two sets of regressions models were used to investigate the important determinant factors affecting the export prices of trader and producer coffee, one each for trader and producer coffee, to measure the impact of the ECX on the prices and to evaluate the effect of the coffee types and grades on the prices. The results show that after coffee was forced to be traded via the ECX, traceable coffee export prices increased more than the reported price of non-traceable coffee. We also found that after the introduction of the ECX, the reported export prices of coffee were much more closely aligned to the movements in the international prices of coffee than before the ECX. Furthermore, we also find evidence that exporters and overseas buyers do not trust the results of the inspection and grading of coffee by the ECX unless traceability is also present. This is the first study to evaluate foreign buyers’ willingness to pay for the attribute of traceability of Ethiopian coffee and to see how traceability has affected buyers’ trust in the grades given by the ECX for the coffee it graded.

Suggested Citation

  • Ludovic Mbakop & Glenn Jenkins & Leonard Leung & Kamil Sertoglu, 2023. "Traceability, value, and trust in the coffee market: A natural experiment in Ethiopia," Working Paper 1504, Economics Department, Queen's University.
  • Handle: RePEc:qed:wpaper:1504
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1504.pdf
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    References listed on IDEAS

    as
    1. Pradyot Ranjan Jena & Bezawit Beyene Chichaibelu & Till Stellmacher & Ulrike Grote, 2012. "The impact of coffee certification on small-scale producers’ livelihoods: a case study from the Jimma Zone, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 43(4), pages 429-440, July.
    2. Dickinson, David L. & Bailey, DeeVon, 2002. "Meat Traceability: Are U.S. Consumers Willing To Pay For It?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(2), pages 1-17, December.
    3. Leonard Leung, 2014. "Eroded Coffee Traceability and Its Impact on Export Coffee Prices for Ethiopia," Development Discussion Papers 2014-04, JDI Executive Programs.
    4. Andersson, Camilla & Bezabih, Mintewab & Mannberg, Andrea, 2017. "The Ethiopian Commodity Exchange and spatial price dispersion," Food Policy, Elsevier, vol. 66(C), pages 1-11.
    5. Gelaw, F., 2018. "Impacts of Trademarking on Export and Producer Prices in Ethiopian Coffee," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277290, International Association of Agricultural Economists.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Glenn P. Jenkins & Ludovic Mbakop & Mikhail Miklyaev, 2023. "Enhancing Coffee Quality in Rwanda: A Cost Benefit Analysis of Government Policies," Sustainability, MDPI, vol. 15(23), pages 1-27, December.

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    More about this item

    Keywords

    Ethiopian commodity exchange; Ethiopian coffee; Coffee traceability; Commoditization;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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