The Trade Games

Many poor countries rely heavily on one or two commodities for most of their export earnings. In some cases the cash pays for imported food. So commodity prices can be a matter of life or death. Here we update our earlier commodity reports. The figures in brackets indicate the latest percentage of the world market held by developing country exporters; the different prices received for the commodity indicate the range of fluctuation over the decade. The symbols indicate where each commodity stands on the road to an international agreement between producers and rich world consumers.


_A formal Commodity Agreement, between producers and consumers to keep the price within a certain range._

*Malaysia (46%), Bolivia (17%), Thailand (12%), Indonesia (5%).*

For years tin enjoyed a model commodity agreement, using buffer stocks to help keep prices stable. However, the fifth agreement expires this year having been useless for most of its existence. Supply shortages have led to prices way out of range, and the small buffer stock was quickly exhausted. This April there will be attempts to negotiate a sixth agreement with producers and consumers equally dissatisfied with present arrangements. Bolivia and the United States are the major protagonists. The US has already aggravated producers by releasing tin from its strategic stockpile and lowering prices. *Present Price*:Feb. 1980 $76.3/lb. *High Spot*: Feb. 1980 $76.3/lb. *Low Spot*: July 1971 $15.6/Ib.


_A Producers Association only, although not usually one with sufficient muscle to push the price up._

*Guinea (25%), Jamaica (20%), Guyana (15%), Surinam (9%).*

Some of the most aggressive commodity producers are in bauxite - the major ingredient in the manufacture of aluminium. The International Bauxite Association (whose members control 60 per cent of the world exports) led by Jamaica has been trying to maintain producer prices. But the rich country member, Australia, has cold feet about moving without the consumer countries consent. Hard negotiations over the last few years have won some concessions from the six multinational corporations that control most of the world's aluminium production, used for saucepans, and aircraft. But attempts to boost the Third World's stake in smelting and processing has had little success. *Present Price*: Feb. 1980 84.68 cents/lb. *High Spot*: July 1979 74.8 cents/lb. *Low Spot*: July 1972 24.40 cents/lb.


_A formal Commodity Agreement, between producers and consumers to keep the price within a certain range._

*Cuba (39%), Brazil (9%), Philippines (7%), Thailand (5%), Dominican Republic (4%).*

After trailing along in the bottom half of the price league for most of the second half of the 1970s, sugar has recently shown some resurgence. Unfortunately prices will not offset lost earnings for the hurricane-hit Caribbean producers. The 1977 Agreement on sugar has done little but impose export quotas at times of low prices. After two years of debate the US has accepted the agreement, which may help to steady prices in the future. But cane sugar still only commands 60% of the market and the EEC, producer of every-increasing amounts of beet sugar, is now a large exporter. Artificial sweeteners could also present a threat in the 1980s. *Present Price*: Feb. 1980 19.28 cents/lb. *High Spot*: Nov. 1974 S6.14 cents/lb. *Low Spot*: Jan 1970 3.06 cents/lb.


_A formal Commodity Agreement, between producers and consumers to keep the price within a certain range._

*Malaysia (52%), Indonesia (23%), Thailand (13%), Sri Lanka (4%).*

The new star of the commodity league is rubber. Vast improvements in production techniques and quality, and the ever-increasing cost of oil-dependent synthetics has given the natural product an unexpected price boost. Consumer fears about future supplies led to the first ever international commodity agreement for natural rubber and the United Nations Committee on Trade and Development's one and only success in this field. Sadly the prices to be defended by buffer stocks are well below present market rates, but consumers have agreed to contribute to the financing of such stocks. If Western demand, particularly from the car industry, keeps up all should be well. However, more sophisticated production techniques are threatening the less efficient small rubber farmers. *Present Price*: Feb. 1980 86.25 cents/lb. *High Spot*: June 1979 63.9 cents/lb. *Low Spot*: April 1972 13.9 cents/lb.


_An 'Intergovernmental Committee'-an informal group 3 of producers and consumers._

*Bangladesh (69%), Thailand (15%), Nepal (6%), India (3%).*

Jute is challenging sisal for bottom of the league position. It is the staple export of Bangladesh - 90% of the country's export earnings come from this product. Prices have revived slightly thanks to better quality plants and production. But the real price trend for this synthetic-hit product is ever downward. Polypropylene has virtually taken over jute's major commercial use as a carpet-backing. UNCTAD's negotiations will probably lead to more money for research and development into new jute products, but little else. *Present Price*: Jan. 1980 $429/long ton. *High Spot*: March 1975 $483.5/long ton. *Low Spot*: Jan. 1974 $258/long ton. A further five commodities, coffee, tea, cocoa, copper and bananas will be reported on next month.

New Internationalist issue 086 magazine cover This article is from the April 1980 issue of New Internationalist.
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