The Competitiveness and Efficiency of Coffee Trade: Like-Minded Countries to European Union

Abstract

Coffee is a key commodity in international trade, particularly within the European Union (EU), which serves as the primary market for countries in the Like-Minded Countries (LMC). However, trade restrictions, particularly those related to environmental policies, have emerged as significant barriers to agricultural trade, including coffee exports. As LMC countries remain major suppliers to the EU, it is crucial to examine the factors influencing coffee’s competitiveness and untapped export potential. This study analyzes the competitiveness and efficiency of coffee exports from 16 LMC to the EU between 2013 and 2022. The analysis employs several methodologies, including Revealed Comparative Advantage (RCA), Export Product Dynamics, the X-Model, and Stochastic Frontier Analysis (SFA). Th e findings reveal that LMC that adapt to stricter sustainability standards and increase transparency in their supply chains can increase competitiveness. Empirical estimates indicate that the EU’s Gross Domestic Product (GDP) positively influences coffee imports, while economic distance, exchange rates, and coffee import prices have a negative impact on import volumes. Additionally, the study highlights a significant gap between actual and potential coffee imports, suggesting opportunities for greater import efficiency. Based on these findings, it is recommended that LMC countries enhance coffee quality through sustainability certifications, capitalize on Free Trade Agreements (FTA), and improve trade infrastructure to reduce logistical barriers and transaction costs, thereby maximizing export potential to the EU.