The Effect of Domestic Consumption on Natural Rubber Farmgate Prices in Colombia

This article investigates the impact of domestic consumption on the farmgate price of natural rubber in Colombia using an Autoregressive Distributed Lag (ARDL) model with annual data from 2000 to 2022. While Colombia’s natural rubber sector has historically depended on volatile export markets, growing domestic demand presents an opportunity to stabilize producer incomes. The econometric results reveal that domestic consumption exerts a positive and statistically significant effect on farmgate prices in the long run, though short-run effects are negligible. The study integrates microeconomic price theory, Structuralist Agricultural Economics, and New Institutional Economics to interpret these findings, highlighting the importance of internal demand and market coordination in price formation. Policy recommendations include stimulating domestic processing, improving value chain integration, and enhancing market transparency to ensure rural producers benefit from growing local demand.