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Welfare effect of eliminating commodity price volatility: Evidence from Tanzania coffee farmers

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dc.contributor.author Kweka, Godfrey J.
dc.date.accessioned 2023-08-23T08:26:51Z
dc.date.available 2023-08-23T08:26:51Z
dc.date.issued 2018
dc.identifier.citation Kweka, Godfrey J. (2018). Welfare effect of eliminating commodity price volatility: Evidence from Tanzania coffee farmers. African Journal of Agricultural Research, 13 (35), 1837-1851. en_US
dc.identifier.issn 1991-637X
dc.identifier.other DOI: 10.5897/AJAR2018.13198
dc.identifier.uri http://repository.mocu.ac.tz/xmlui/handle/123456789/588
dc.description.abstract This paper investigated the welfare consequences of reducing coffee price volatility in Tanzania. GARCH (1,1) model is fitted with monthly coffee prices from 1998 to 2017 to estimate the conditional and unconditional variance of the residual. The coefficient of relative risk aversion and unconditional variance of GARCH (1,1) model are applied in a typical Lucas-like representative argent model to examine the welfare consequences of eliminating price volatility using the case of coffee farmers in Tanzania. The empirical finding shows that the welfare gain from eliminating price volatility for coffee farmers in Tanzania is small. Taking into account the effects of reforms in coffee industry and economic crisis, the welfare gain remains at 1.139% of revenue from coffee sales per year. Given that coffee market is under oligopoly stage still there is some degree of monopoly in terms of regulations thereby rising a need of “check and balance” to ensure that bureaucratic challenges are addressed. Nonetheless inclusive hedging strategies, improving production and quality of coffee, provide the next step in improving the welfare of the coffee producers where reducing coffee price volatility at a cost might not be a desirable choice. en_US
dc.language.iso en en_US
dc.publisher African Journal of Agricultural Research (AJAR) en_US
dc.subject Tanzania en_US
dc.subject Coffee price volatility en_US
dc.subject Welfare consequences en_US
dc.subject Inclusive hedging mechanisms en_US
dc.subject Farmers en_US
dc.title Welfare effect of eliminating commodity price volatility: Evidence from Tanzania coffee farmers en_US
dc.type Article en_US


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