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

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  • Seneshaw Tamru
  • Bart Minten
  • Johan Swinnen
Abstract
Exchange 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. We further find that the consequent high wholesale prices for coffee are transmitted to producers, so that coffee farmers are unintended beneficiaries of this rent.

Suggested Citation

  • Seneshaw Tamru & Bart Minten & Johan Swinnen, 2021. "Trade, value chains, and rent distribution with foreign exchange controls: Coffee exports in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 81-95, January.
    • Handle: RePEc:bla:agecon:v:52:y:2021:i:1:p:81-95
    DOI: 10.1111/agec.12608
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    1. Bekkers, Eddy & Brockmeier, Martina & Francois, Joseph & Yang, Fan, 2017. "Local Food Prices and International Price Transmission," World Development, Elsevier, vol. 96(C), pages 216-230.
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    9. Johan F. M. Swinnen & Harry De Gorter, 1993. "Why Small Groups And Low Income Sectors Obtain Subsidies: The “Altruistic” Side Of A “Self‐Interested” Government," Economics and Politics, Wiley Blackwell, vol. 5(3), pages 285-293, November.
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    13. Kym Anderson, 2009. "Distortions to Agricultural Versus Nonagricultural Producer Incentives," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 55-74, September.
    14. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
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    17. Tafere, Kibrom & Taffesse, Alemayehu Seyoum & Tamru, Seneshaw & Tefera, Nigussie & Paulos, Zelekawork, 2011. "Food demand elasticities in Ethiopia: Estimates using household income consumption expenditure (HICE) survey data," ESSP working papers 11, International Food Policy Research Institute (IFPRI).
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    2. Gaofeng Wang & Shuai Li & Zihao Zhang & Yanning Hou & Changhoon Shin, 2023. "A Visual Knowledge Map Analysis of Cross-Border Agri-Food Supply Chain Research Based on CiteSpace," Sustainability, MDPI, vol. 15(14), pages 1-28, July.

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