U.S. import demand for green coffee by variety

Total United States imports of green coffees were divided into three principal components: milds, brazils, and robustas. The aim was to clarify the demand relationships among the major coffee varieties traded internationally and the factor influencing coffee prices by variety. A nine-equation model of the U.S. coffee market was constructed, consisting of import-demand, export-supply, and stock-demand functions describing the structural mechanisms underlying the market for each of the three coffee varieties. Estimates of structural parameters were obtained by different estimation methods, but only three-stage least-squares results are reported in this article. Parameter estimates suggest that milds (the premium coffee variety) are normal economic goods, whereas brazils and robustas are inferior goods with respect to the U.S. economy. Income flexibility estimates at the mean were 0.39, -0.89, and - 1.82, respectively, for milds, brazils, and robustas. Estimated price flexibilities at the mean were, for the three coffee varieties in the same order, -0.18, -0.21, and -0.36. These figures suggest that demand for individual coffee varieties is reasonably price-elastic