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close this bookCERES No. 058 (FAO Ceres, 1977, 50 p.)
close this folderWorld report
View the documentTime for a little order on the commodity markets
View the documentThe new IMF facility: an oxygen mask
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Time for a little order on the commodity markets

Meeting in Rome from 2 to 6 May, the FAO Committee on Commodity Problems has sounded the alarm: world markets are in delirium, and the waltz of prices, stocks and trading seems never-ending. In 1976, coffee exports, for example, increased by 85 percent in value, rising from $3.9 to $7.3 thousand million, and cocoa exports by about 8 percent. On the other hand, sugar exports dropped from $10.7 thousand million in 1975 to $7.3 thousand million in 1976, while the scarcity in 1975 gave way, in 1976, to surpluses: a depression in world prices was the result. It is possible that in 1977 consumption will increase in the United States and Canada, these two countries having recently forbidden the use of saccharine as a food additive. Overall, increases have been noted, not only for coffee and cocoa, but also for rubber, tea, bananas, rice and soya.

The price of coffee continued to soar during the first quarter of this year. That of cocoa showed a sharp rise in January and February, and fluctuations in March-April. The price of cotton, which had dropped at the end of 1976, rose again at the beginning of 1977. It is foreseen that consumption will drop this year.

There are few changes to be noted on the world market of industrial fibres. The price of tea, on the other hand, is flaring up. It is almost twice as high now as it was in January 1977.

The demand for soya is considerable, but it is feared that production will hardly increase at all. The figures for harvests in the United States where, in recent years, these fluctuations have been very pronounced, are anxiously awaited. In March, the price of soya increased by 17 percent; that of soybean oil by 20 percent and that of coconut oil by 38 percent. Moreover, during the first quarter of 1977 there were substantial rises in the prices of the principal oilseeds, oils and proteins (oil meals).

The price of beef has increased slightly, production having been reduced in North America and Western Europe. EEC purchases have dropped. However, frozen beef stocks remain considerable. It is foreseen that exports will be lower this year than in 1976. There is also a drop in the price of pork.

Sagging production of wheat and coarse grains is foreseen for 1977, but it is possible that availabilities will remain unchanged thanks to stocks having been replenished in 1976. A record volume for world trade in rice was registered in 1976: 8 1 million tons. Exports from developing countries showed a rise of 75 percent. However, a slight drop is expected this year. According to forecasts, total stocks of cereals, at the end of the 1976-77 season, will reach 155 million tons, or 33 million more than at the end of the 1975/76 season.

Markets are evenly balanced with regard to bananas and rubber, the prices, on the whole, remaining stable. It is foreseen that butter stocks, already considerable, will again show a tendency to rise.

It becomes increasingly obvious that markets must be regularized by the constitution of adequate and well-managed stocks, by the negotiation of agreements on all commodities, and by the creation, finally, of the famous "common fund," on which it was not possible to reach agreement in March-April last, despite the efforts of UNCTAD. We will mention this again in November at the latest.

· Food losses: the $20 million Fund progresses

As we hoped in ceres No. 55 (p. 7), the FAO Committee on Agriculture meeting in April approved the creation of a $20 million fund for the struggle against food losses. This does not mean to say, alas, that it will become operational at once, since it must still receive the endorsement of the governing bodies of the Organization ... and the subscriptions. Democracy has its drawbacks.

How will this fund be used? The FAO Committee on Agriculture requests that campaigns be launched at national level to invite people to reduce food losses. Awareness of the problem is necessary. Also, it may be remembered that the United Nations wishes to encourage efforts on a planetary level to reduce by half, by 1985, food losses during transit from producer to consumer.

It will not be easy to obtain satisfactory results quickly. Obstacles will undoubtedly arise, particularly at village level. Moreover, specialists in tropical postharvest technology are extremely few. However, the FAO Committee on Agriculture considers that the constitution of a fund should be supported, because, despite the difficulties to be overcome, the prospects of a victory are very enticing. As one press release put it, "the prize of success will be enormous."

· ESCAP issues its 1975 yearbook

The import and export trade in the countries of Asia and the Pacific more than quintupled in the decade 1964 to 1974. This spectacular growth doubtless represents one of the most positive facts of the economic development of this region. This is shown by the 1975 statistical yearbook just published by the Economic and Social Commission for Asia and the Pacific (ESCAP). It contains information for 34 member and associate member countries of ESCAP, not only on trade, population, agriculture and industry, but also on employment, energy supplies, consumption, transportation, communications, wages, prices, forestry, fisheries and, at the end, all the social and financial indicators.

According to ESCAP, the total value of imports during the 10-year period 1964 74 rose from U.S.$24 thousand million to $ 137 thousand million. Exports rose even more, reaching the same level as imports in 1974, whereas in 1964 they came to only $20.5 thousand million. The share of the developing countries in the region's trade was almost six times larger in 1974 than in 1964. In fact, the value of the imports of these countries increased from $12 thousand million to $61) thousand million while that of exports, which attained only $10 thousand million in 1964, reached $68 thousand million ten years later.

Nevertheless, and despite this impressive development of trade, the rate of population growth versus food production is a matter of concern. While the annual growth rate of agriculture and food production was 2.4 percent, population growth accelerated year after year, rising by as much as 2 percent between 1973 and 1974.

· The Asian Rice Trade Fund: a difficult birth

More than two years after its creation, in December 1974, the Asian Rice Trade Fund is still not operational. Established under the auspices of the Economic and Social Commission for Asia and the Pacific (ESCAP), this Fund was supposed to assist the participating countries in meeting foreign exchange difficulties arising from fluctuations in the rice trade, notably, by providing facilities for government-to-government transactions.

Nothing could be done up to now due to lack of financial resources as well as of participants: there are only a very few rice-exporting countries among the signers of the agreement, while the developed countries of the region are completely excluded from membership. Thus, the first step is to open the Fund to wider membership.

Meeting at the beginning of March in Bangkok to consider ways of bringing the Fund into operation, its Board of Directors decided that all member countries of ESCAP, both developing and developed, could join it. The Board, moreover, entrusted ESCAP with contacting several international agencies to help in its financing. If, indeed, it could be considered as a development project of the Asian region aimed at food security, it could be assisted by agencies such as the World Bank or the Asian Development Bank. Detailed proposals on the mechanisms for guaranteeing markets and the establishment of a system of ceiling and floor prices will need to be formulated by a working group, in consultation with the countries concerned.