Statistical analysis of factors that affect volumes of coffee exports from 1997 to 2017
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Volumes of Coffee exports have been varying in amounts and coffee as a traditional cash crop which brings in the highest export earnings in Uganda has been growing. The presence of empirical and viable information for supporting consistent growing volumes of coffee was needed to be addressed by this study, so as to help policy analysts to execute informed decisions. The main objective of the study was to carry out statistical analysis of factors that affect volumes of coffee export from 1997 to 2017. The sub objectives of the study were to determine the short run effects of factors affecting volumes of coffee exports and lastly to determine the long run effects of factors affecting volumes of coffee exports. The study was also prompted by findings, prompted by different researchers on effects different factors affecting volumes of coffee. The study was conducted using data obtained from Uganda Coffee Development Authority, World Bank tables and Bank of Uganda. A coffee export model was adopted for the study. The factors were foreign price level, terms of trade, Gross Domestic Product, exchange rate and foreign direct investment. Stationarity at different levels was revealed using the augmented dickey fuller test. Johansen’s Cointegration test revealed existence of a long run relationship of variables. Auto regressive Distributed Lag model was used for examining the objectives above. In the long run Gross Domestic Product was the only significant variable with a p value of 0.04 which was less than the 0.05 level of significance. In the short run exchange rate and foreign direct investment were the only significant variables at 0.03 and 0.02 levels of significance that were lower than the 0.05 level of significance. The study recommends in order to improve the value and volume of coffee exports, the motive for foreign direct Investment should be establishment of import substitution industries to change from capturing the domestic market to production for export markets. The study also recommends that the government should extend capital to exporters who are involved in interdependent chains of coffee production so as process valuable coffee exports that meet international standards. This is because the statistical significance of Gross Domestic Product means that added value in other sectors of the national economy significantly affects volumes of coffee exports. The study also encourages the central bank to exercise currency devaluation appropriately so as to facilitate sales maximization coffee exporters who look to increase earnings through this motive and in turn the Uganda earns back through increased cash flow that caters for essential activities.