A Real Options Analysis of Coffee Planting in Vietnam

Vietnam grew from an insignificant to the world’s second largest coffee producer during the 1990s. To understand this growth, this paper examines Vietnamese coffee growers’ investment decisions using real options theory. The study finds that producers, with variable costs of 19 cents/lb and total cost of 29.3 cents/lb, would enter coffee production at a coffee price of 47 cents/lb and exit at a coffee price of 14 cents/lb. Most Vietnamese growers appear to be sufficiently efficient to continue producing coffee even at relatively depressed price levels.


Issue Date:
2004-10
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/127152
Total Pages:
25
Series Statement:
WP 2004-13




 Record created 2017-04-01, last modified 2017-08-26

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