Submit Manuscript | http://medcraveonline.com Abbreviations: ICA, international coffee agreement; ICO, international coffee organization; FAO, food and agricultural organization; CGR, compound growth rate; NPC, nominal protection coeffcient; MAD, minimum absolute deviations; CCD, café coffee day Introduction Coffee is of global importance, ranking second to petroleum in the world commodity trade. Moreover, coffee is of particular importance as a major export commodity in many low-income and developing countries in Latin America, Africa and Asia. Coffee was one of the frst commodity in which control over world trade was attempted. Brazil, producing from 75 to 90 percent of the world’s coffee in the early 1900’s, led Columbia and other Latin American countries to a series of producer-country agreements to control exports and raise world prices from 1902 until the frst International Coffee Agreement was signed in 1962. This agreement represented a major change in the world coffee market since major coffee importing countries (including the USA) also became signatories. The International Coffee Agreement (ICA) is an international commodity agreement aimed to achieve a reasonable balance between the supply and demand of coffee. Export quotas are the principal instruments used. The original agreement was signed in 1962 for a fve-year period, and since then there have been fve subsequent agreements, ratifed in 1968, 1976, 1983, 1994, and 2001. International Coffee Organization (ICO) exporting members account for over 97 percent of world coffee production and its importing members are responsible for around 80 percent of world coffee consumption. The coffee industry currently has a commodity chain that involves producers, middlemen exporters, importers, roasters, and retailers before reaching the consumer. Middlemen exporters often referred to as coffee “coyotes,” purchase coffee directly from small farmers. Large coffee estates and plantations often export their own harvests or have direct arrangements with a transnational coffee processing or distributing company. India is the sixth largest producer of coffee in the world, accounting for over four percent of world coffee production, with the bulk of all production taking place in its Southern states. It is believed that coffee has been cultivated in India longer than anywhere outside of the Arabian Peninsula. Indian coffee is said to be the fnest coffee grown in the shade rather than direct sunlight anywhere in the world. There are approximately 250,000 coffee growers in India, 98 percent of them are small growers. Almost 80 percent of the country’s coffee production is exported. Of that which is exported, 70 percent is bound for Germany, Russian federation, Spain, Belgium, Slovenia, United States, Japan, Greece, Netherlands and France. In the backdrop of these issues, the present study is an attempt to evaluate the growth and instability in the export of coffee, its trade competitiveness in the world market and direction of trade and changing pattern of exports of coffee. Methodology Till 1995, the Coffee Board had a pool (controlled) marketing system of coffee in India. However, the winds of liberalization swept the Indian coffee industry and since 1995, marketing of coffee is strictly a private sector activity. Therefore, the period from 1995-96 to 2009-10 was purposively considered for the study. Data for the study were collected from various sources. Time series secondary data on the export quantity, destination wise of exports, wholesale prices of coffee in various major consuming centers in India have been compiled from Indiastat and other various sources like Food and Agricultural Organization (FAO), published journals, periodicals and websites for a period of 1995-96 to 2009-10 (Post liberalization of coffee industry) for coffee. The information on international prices (composite indicator prices) of coffee was compiled from International coffee organizations. The analytical tools employed in the present study are elaborated as under. Compound growth rate model The growth in quantity of export of coffee was analyzed using the compound growth rate (CGR). CGR was computed using log-linear model. ln yt=α t + β t +u t Where, y t =Quantity (tons) of coffee in year t. t=Time element which takes the value 1, 2…………..n for various years. α t =Intercept β t =Regression coeffcient Annual compound growth rate (r)=[(Antilog β t )]×100 Horticult Int J. 2018;2(1):7‒13 7 © 2018 Vinod et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and build upon your work non-commercially. Changing direction and magnitude of india’s coffee export in the post-liberalization era Volume 2 Issue 1 - 2018 Vinod Naik R, Nethrayini KR Department of Agricultural Economics, University of Agricultural Sciences, India Correspondence: Vinod Naik R, Department of Agricultural Economics, University of Agricultural Sciences, Dharwad-580 005, India, Email naikvinod00@gmail.com Received: July 22, 2017 | Published: January 17, 2018 Abstract An attempt has been made in this paper to study the direction of trade, trade competitiveness and stability in the export and changes in the export of Indian coffee. The study revealed that barring the year 1997, coffee is perfectly competitive with its NPC value being less than unity till 2000 and from 2000 onwards, the domestic price for coffee in India is more competitive than the international prices. The results of Markov Chain analysis revealed that other countries are the most stable importer of the Indian coffee while Spain is the least stable importer compared to other countries. Keywords: coffee, compound growth rate, NPC, markov chain analysis Horticulture International Journal Research Article Open Access