Trade, value chains, and rent distribution with foreign exchange controls: Coffee exports in Ethiopia

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dc.creatorTamru, Seneshaw
dc.creatorMinten, Bart
dc.creatorSwinnen, Johan
dc.date2019-09-18
dc.date2024-06-21T09:05:33Z
dc.date2024-06-21T09:05:33Z
dc.date.accessioned2026-06-27T14:55:25Z
dc.descriptionExchange rate policies can have important implications on incentives for export agriculture. However, their effects are often not well understood. We study the issue of foreign exchange controls and pricing in the value chain for Ethiopia’s coffee - its most important export crop. Relying on unique pricing and cost data, we find that coffee exporters are willing to incur losses during exporting by offering high prices for coffee locally in order to access scarce foreign exchange. The losses in export markets are then more than recovered in importing, indicating rents - import parity prices are significantly lower than the prices charged for imported goods, so that profits on imports are much higher than the losses incurred in exporting. We further show that the high coffee wholesale prices are transmitted to farmers, so that they benefit from the rents downstream. These results suggest that a better exchange rate alignment to reduce the overvaluation of the local currency in this case would have a lower impact on export crop producer prices than typically is anticipated.
dc.formatapplication/pdf
dc.identifierhttps://hdl.handle.net/10568/146004
dc.identifier.urihttp://hdl.handle.net/123456789/89501
dc.languageen
dc.publisherInternational Food Policy Research Institute
dc.publisherFederal Democratic Republic of Ethiopia Policy Studies Institute
dc.relationhttps://doi.org/10.1111/agec.12608
dc.rightsOpen Access
dc.sourceTamru, Seneshaw; Minten, Bart; and Swinnen, Johan. 2019. Trade, value chains, and rent distribution with foreign exchange controls: Coffee exports in Ethiopia. ESSP Working Paper 136. Washington, DC; Addis Ababa, Ethiopia: International Food Policy Research Institute (IFPRI); Federal Democratic Republic of Ethiopia Policy Studies Institute. https://hdl.handle.net/10568/146004
dc.subjectimports
dc.subjectsupply chains
dc.subjectexports
dc.subjecttrade
dc.subjectcoffee
dc.subjectfood prices
dc.subjectexchange rate
dc.subjectprices
dc.titleTrade, value chains, and rent distribution with foreign exchange controls: Coffee exports in Ethiopia
dc.typeWorking Paper

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Instituto Internacional de Investigación sobre Políticas Alimentarias (IFPRI)