Assessing short and long-term effects on Brazilian cocoa exports

Abstract

Although a large part of Brazilian cocoa production is destinated to the domestic market, the international trade is responsible to that add more value to the product and increased income in the supply chain. In this study we aimed to analyze the short and long-term effects of prices and production on Brazilian cocoa exports. We gathered data from 1994 to 2022, we tested the existence of cointegration between the variables export, price and cocoa production using the Johansen test, then estimated a Vector Error Correction Model (VECM). The results confirmed the existence of at least one cointegration vector. It was noted that the price, production, and exports of the previous year have a positive impact on contemporary exports. Shocks and deviations in the market tend to be corrected in the long term at a rate of 29.1% per year. Considering the necessary adjustment time, changes in the external market can influence internal availability, therefore, adding value to the supply chain and improving production systems are important for the cocoa production sector.