Integration of Domestic and International Markets of Indian Coffee

Abstract

Coffee is an important commercial crop of the tropics and it is the largest and widely traded tropical agricultural commodity. The present study was conducted to examine integration of domestic and international markets of Indian coffee prices during 2005-06 to 2016-17. The domestic markets selected for coffee prices were Bangalore, Chennai and Hyderabad markets. Similarly, international markets were International coffee organization (ICO), New York and London. The results revealed that, Johansen’s Co-integration of Arabica and Robusta group prices had long run equilibrium and also implied strength and stability of price linkages between selected markets. Granger causality test showed that ICO and New York markets uni-directionally influenced the price of Bangalore, Chennai and Hyderabad markets, respectively but there was bi-directional causality among the selected domestic wholesale Robusta group markets. Bangalore and Chennai markets are considered to be dependent on the other markets, the speed of adjustment in Robusta group coffee was registered 54 per cent and 33 per cent, respectively. There is need to spend much more money on demand creation, like cafe coffee day, which help to promote coffee consumption within the country. So our producers fetch the better prices for their produce.