SUPPLY RESPONSE IN THE COLOMBIAN COFFEE SECTOR,
Abstract
The coffee industry in Colombia has a continuing production surplus that is of great policy concern to the government. This memorandum formulates an econometric model of the supply of Colombian coffee to use in estimating how the coffee industry would respond to price incentives to lower production. Empirical results obtained from the model suggest that (1) changes in price do not affect the intensity of harvesting, (2) there are lags of 5 years between price changes and 7 years between production changes, and (3) the elasticity of coffee supply with respect to price is about 0.5. These findings imply that a 20 percent reduction in producer prices would lead to a 10 percent reduction in coffee production, but only after 7 years. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 1969
- Accession Number
- AD0697390
Entities
People
- Merrill J. Batemen
Organizations
- RAND Corporation