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Commodity buffer stock redux: The role of International Cocoa Organization in prices and incomes

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  • Swaray, Raymond
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    Abstract

    This paper utilizes linear demand and supply models, with additive independent shocks, to derive producer price and income variances of a typical commodity during and after a buffer stock control. It proceeds to use the models to evaluate International Cocoa Organization's (ICCO) Buffer Stock's decision to purchase excess stock from the market a floor price and re-sell it, in periods of low supply, at the ceiling price. The results show that cocoa producer prices and incomes were more stable during periods of ICCO buffer stock intervention than after the demise of the buffer stock. The results further indicate that stock-buying operations induced greater stability in producer incomes than buying stock-selling operations.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Policy Modeling.

    Volume (Year): 33 (2011)
    Issue (Month): 3 (May)
    Pages: 361-369

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    Handle: RePEc:eee:jpolmo:v:33:y:2011:i:3:p:361-369

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    Web page: http://www.elsevier.com/locate/inca/505735

    Related research

    Keywords: Buffer stocks Price stabilization Cocoa Africa Cote d' Ivoire;

    References

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    1. Raymond Swaray, 2007. "How did the demise of international commodity agreements affect volatility of primary commodity prices?," Applied Economics, Taylor & Francis Journals, vol. 39(17), pages 2253-2260.
    2. Hommes, C.H. & Sonnemans, J. & Tuinstra, J. & Velden, H. van de, 2002. "Learning in Coweb Experiments," CeNDEF Working Papers 02-06, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
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    10. Rolfo, Jacques, 1980. "Optimal Hedging under Price and Quantity Uncertainty: The Case of a Cocoa Producer," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 100-116, February.
    11. Zant, Wouter, 1997. "Stabilizing prices in commodity markets: Price bounds versus private stockholding," Journal of Policy Modeling, Elsevier, vol. 19(3), pages 253-277, June.
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    14. Gilbert, Christopher L., 1995. "International commodity control : retrospect and prospect," Policy Research Working Paper Series 1545, The World Bank.
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