MACROECONOMIC FACTORS THAT AFFECT EXPORT PRICES OF COFFEE IN ETHIOPIA

Abstract

This study investigates macroeconomic factors that affect export prices of coffee in Ethiopia using panel data that span the period 2001-2020 in 40 Ethiopian coffee destinations. The quantitative data were collected from the National Bank of Ethiopia (NBE), Ethiopian Coffee and Tea Authority (ECTA), International Coffee Organization (ICO), Ethiopia Customs Commission (ECC), WB and IMF. Results of the panel data econometric models show that over 54% of the coffee export price variability was explained by the macroeconomic variables included in this study. The findings of the study revealed that the parameter estimates of inflation rate, exchange rate, GDP growth rate and per capita income of coffee buyers were statistically significant and have a positive effect on the export price of coffee in Ethiopia. However, terms of trade and world coffee supply change were statistically significant and have negative effect on coffee export price. The results of the study have important policy implications in areas that seek to improve value chain development, market expansion, and productivity and export diversifications.