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The Transmission of International Commodity Prices to Domestic Producers

By Marcel Fafchamps, Ruth Hill and Aliziki Kaudha

Abstract

Using detailed data from three simultaneous surveys of producers, traders, and exporters, this paper examines the transmission of international coffee prices through the domestic value chain in Uganda. We find that fluctuations in the international coffee price are reflected in prices paid by exporters and large traders. However, prices paid at the market level need not reflect prices actually received by farmers. This apparent lack of price transmission may be due to seasonal changes and to the fact that producers are more likely to sell at the farm-gate when prices go up. We also find some evidence that the number of itinerant coffee buyers increases when prices rise.

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