Transmission of World Prices to Ugandan Coffee Growers in a Liberalised Economy

Abstract

This article examines the transmission of world coffee prices to the price received by Ugandan coffee growers by means of Directed Acyclic Graphs which reveal the flow of information from the spot indicator price to the London futures price and then to the growers' price. A positive shock in the futures and indicator prices has respectively a positive and negative effect on the growers' price, and Forecast Error Variance Decomposition shows that uncertainty is attributable to own price, London futures price, and indicator price, in rank order. The article recommends that the Ugandan Coffee Development Authority should provide information on both futures and indicator prices to the growers.

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Coffee prices volatility and transmission : developing risk management instruments for coffee growers in Ecuador

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