Investigating the Factors that Affect the Price of Specialty Coffee

• Main Authors: Yi-Yin Wang, 王怡尹
• Other Authors: 廖述誼
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/26763115563771702439

碩士 === 國立中興大學 === 應用經濟學系所 === 104 === Along with the economic growth, coffee has become the second largest international traded commodity in the world. Although the exporting volumes of unroasted coffee beans have been increasing steadily over the past century, many farmers who live in producing countries are still suffering from poverty. A large proportion of the benefit of the coffee industry are captured by major coffee enterprises, only a small proportion of the benefits are distributed to the coffee exporting countries. To improve the lives of the coffee growing farmers and increase the revenues for coffee exporting countries, the Cup of Excellence (COE) program was established in 1999 by a non-profit organization Alliance for Coffee Excellence (ACE). After a series of cupping by National and International juries, coffee beans that have scored over 85 points will get the chance to be awarded Cup of Excellence and progress to the Internet Auction. Therefore, ACE provides a transparent trading platform for specialty coffee growing farmers to have the opportunities to sell their coffee beans at premium prices. The main purpose of this study is to investigate the relationship between price and the hedonic characteristics of specialty coffee using hedonic price models. The data used in this study were retrieved directly from COE auction results for the years 2012 to 2015, which include biding price, quantity, cupping score, and producing regions for 10 participating countries. The empirical results show that there exist significant negative relationship between auction price and quantity for Brazil, Guatemala, El Salvador, and Burundi. Most importantly, there is a strong positive relationship between price and cupping score for all countries. Especially for Guatemala and Costa Rica, the price will increase by more than 3 dollars per pound when the cupping score increase by one point. Among all countries, Brazil is the only country that has a significant price difference between the main producing region and other regions. Based on the results, we conclude that cupping score is the most important factor affecting the price of specialty coffee. This provides a strong incentive for the coffee growing farmers and the coffee exporting countries to focus on improving the quality of their coffee beans instead of only trying to increase their yields and export quantity of coffee.