Cross country analysis of the impact of coffee price on land use change
Student name: Ms Aparajita Tyagi
Guide: Dr Kavita Sardana
Year of completion: 2017
Host Organisation: TERI University
Abstract: Coffee is one of the most valuable commodity crops in the world serving the source of livelihoods for around 25 million small scale farmers across the world. Since 1990s, a series of international events attributed primarily to the collapse of international Coffee agreement in 1989, ushered towards a situation price fluctuation. These market based trends are often classified as the drivers of land use decisions. Farmers have dealt with this unpredictability by adopting various production techniques such as diversification of crops, conversion of forests to coffee farms and even complete abandonment of farms. Although these measures procured high yields for the farmers but were also associated with biodiversity and conservation concerns. The study using a Fixed Effects Estimation procedure for a panel data 44 countries across 7 years attempts to analyse the impact of world coffee prices, total production and international policy shocks on the land use change which is defined as change in area under coffee relative to 1 per cent forest cover. Also, the paper seeks to examine the policy level implications of the various changes in cultivation practices across the world due to price changes. The results suggest that world indicator prices exert a positive and significant influence on land use change. Additionally, the movements in the international market due to entry of new players, weather conditions, pest attacks, changes in management styles in coffee cultivation influence the land use change significantly. Interventionist policies to promote the markets for sustainable coffee with focus on reducing the vulnerabilities of farmers against coffee price volatilities are the need of the hour.
Key words : coffee, indicator prices, land use change, fixed effects estimation.
