Price integration in the international coffee market / Integração de preços no mercado internacional de café

AUTOR(ES)
DATA DE PUBLICAÇÃO

2008

RESUMO

Until 1989, the coffee market was marked by a long history of regulation. In addition to the International Coffee Agreement, which dictated the rules at an international level, in each country the price paid to producers was determined by the state according to local needs, regardless the conditions of supply and demand. It was made in a different way in each country. Thus, prices didnt reflect any trend of balance. Thus, the main purpose of this study was to investigate if, with the liberalization, the prices at the producer level have been integrated, sharing a common trend of behavior in long term. It was also examined the degree of integration, measured by the required time for the market to return to the balance after a shock. The study was based on the theory of market integration and on the relationship between producers and processing firms, which characterize a process of oligopsonistic interdependence. Analytically, it was used a multivariate model of cointegration (the reduced VAR proposed by Johansen, 1988) and persistence profiles. The results indicated that Brazil, Colombia, Mexico, Guatemala, Honduras and Peru, representatives of the arabica coffee market (from January 1990 to June 2007) were integrated with each other. Plus, prices of robusta coffee from Vietnam, Brazil and Indonesia (between January 1988 and May 2005) were also integrated. In each country, prices reacted to changes in the international price. It is believed that the fact of few companies control the trade of green coffee, buying the products from the same exporters, and possibly applying similar policies, allowed the existence comovement of prices. However, we should not neglect the role of the conditions of the supply to explain this integration. The pattern of relationship was not characterized by strong interdependence or perfect interaction and it remained clear that questions concerning to the market liberalization also influence in the long term balance. The most quick adjustments occurred between international prices and those of Brazil and Vietnam, a clear indication that the higher the participation in the production and export the higher degree of integration. Therefore, in the analyzed period there was a common and unique flow of information throughout the players in the industry, which responded to market conditions worldwide. A general conclusion is that the market is not segmented and there is transmission of prices, even being prevalent a structure of imperfect competition. This way, policies to control prices are no longer viable.

ASSUNTO(S)

co-integração market integration cointegration oligopsonistic interdependence relacoes do comercio; politica comercial; integracao economica integração de mercados interdependência oligopsônica coffee café

ACESSO AO ARTIGO

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