Coffee pricing volatility hedging using a single-step model

Azeez Abiola Oyedele, Firdu Gemech, Sushil Mohan, John Struthers

Research output: Contribution to conferencePaper

Abstract

Under the dominant liberalised market regime, coffee pricing volatility has been a significant challenge to producers of coffee in Ethiopia, Kenya, Uganda, India and other less developed countries. The volatility exposes the coffee producers to a pricing risk situation since their livelihoods depend on income from the coffee trade. This paper proposes the development of a single-step model pricing that can be used effectively by the producers in the coffee trade to mitigate their pricing risk exposure. The model is applied using numerical analysis on historical data in order to ascertain that it provides Ethiopian coffee producers and other LDCs with a pricing model that could serve as a hedging solution to coffee pricing volatility. Following on the analysis, the paper suggests to the coffee producers that the single-step model pricing may be one of the solutions for pricing coffee products in order to mitigate volatility in coffee trade pricing.
Original languageEnglish
Pages19-19
Number of pages1
Publication statusPublished - 12 Nov 2015
EventAnnual Conference of Centre for African Research on Enterprise and Economic Development (CAREED) : Africa: Proud History, Promising Future - University of the West of Scotland, Paisley PA1 2BE , Paisley, Glasgow , United Kingdom
Duration: 12 Nov 201513 Nov 2015
Conference number: 1

Conference

ConferenceAnnual Conference of Centre for African Research on Enterprise and Economic Development (CAREED)
Abbreviated titleCAREED
Country/TerritoryUnited Kingdom
CityPaisley, Glasgow
Period12/11/1513/11/15

Keywords

  • Coffee producers
  • Volatility
  • Coffee pricing

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