Trade Liberalization and the Coffee Sub-Sector: Some Implication for the Food Sub-Sector

Abstract

In this study an attempt is made to examine trade liberalization and its implications for the coffee sub-sector. Pre and post-reform data are analysed on the basis of 'the before after approach'. The study shows that the liberalization earned out is strongly associated with an increase in the level of export. This result is chiefly attributed to the exchange rate policy pursued. The micro evidences examined show that the supply price elasticity for coffee is either small or statistically insignificant. This implies that price liberalization by itself may not bring a major change in the coffee sub-sector. The study also underscores the problem of ensuring food security by relying on unreliable world primary commodity markets.