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Supply Response And Production Trends Of The Arabica Coffee: A Case Study Of The Small Holdings Of Kiambu County Between 2004 And 2014
This study explores the supply response of the coffee output using the Nerlove model based on prevailing coffee prices and input costs. The estimation results showed that coffee output in the current period varies significantly with changes in the coffee output in the previous period and its two-year lag. The long run price elasticity was estimated at 0.409 for UM1. The results for zones UM2 and UM3, however, yielded a negative relationship with parameter estimates of -0.032 and -0.453, respectively. The long run price elasticity for all the zones was estimated at 0.800. The estimation results also showed that prices of coffee are statistically insignificant in relation to coffee
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