Econometric analysis of wholesale coffee prices and exports from India

Coffee is referred as Brown Gold as it accounts major share in Indian exchequer. In recent years, increase in the domestic coffee consumption attributed to expansion of domestic markets and growing young population. To study the trends in wholesale prices of coffee, the monthly price data of Arabica plantation ‘A’ and Robusta cherry ‘AB’ of Bengaluru, Chennai and Hyderabad markets were collected from Coffee Board of India, Bengaluru. These data were subjected to Linear trend, Co-integration and Granger Causality tests. The Markov chain model was fitted to study the structural changes in export. The results indicated that, the wholesale prices of Arabica plantation ‘A’ and Robusta cherry ‘AB’ in selected markets increased during the study period but the extent vary from market to market. The co-integration test indicated that, the wholesale prices at Bengaluru market for Arabica plantation ‘A’ and Robusta cherry ‘AB’ influence heavily on both Chennai and Hyderabad markets. Italy and Germany emerged as most loyal/stable importer of Arabica plantation ‘A’ whereas Italy and Spain for Robusta cherry ‘AB’ coffee.