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El Niño, La Niña, and world coffee price dynamics
Article first published online: 6 DEC 2011
DOI: 10.1111/j.1574-0862.2011.00562.x
© 2011 International Association of Agricultural Economists
Additional Information
How to Cite
Ubilava, D. (2012), El Niño, La Niña, and world coffee price dynamics. Agricultural Economics, 43: 17–26. doi: 10.1111/j.1574-0862.2011.00562.x
Publication History
- Issue published online: 3 JAN 2012
- Article first published online: 6 DEC 2011
- Received 16 January 2011; received in revised form 2 May 2011; accepted 23 June 2011
Keywords:
- C32;
- Q11;
- Q54
- El Niño Southern Oscillation;
- Coffee prices;
- Smooth transition autoregression;
- Generalized impulse-response functions
Abstract
Coffee is produced in equatorial and subequatorial regions of the world, which are also most affected by El Niño Southern Oscillation (ENSO). ENSO events have a tendency to amplify weather conditions such as droughts or excess precipitation in the affected regions, resulting in production shortage or excess supply, subsequently impacting agricultural commodity prices. In this research we assess effects of ENSO events on world coffee price dynamics using the monthly data between March 1989 and December 2010. We employ smooth transition autoregression framework to examine nonlinear dynamics of ENSO and coffee prices, and illustrate the results of this research using generalized impulse-response functions. We find that ENSO events indeed have short-term impacts on coffee prices. The research findings are of interest to coffee producers and intermediaries in the coffee markets as well as researchers in the fields of environmental and development economics.