International Agreements for Commodity Price Stabilisation: An Assessment
AbstractThis paper looks at commodity stocks, their role in price determination for storable commodities, and past efforts of international stockholding arrangements with economic provisions in stabilising world prices. Low stocks to use ratios of recent years were one of a number of contributory factors to the grain price spike in 2007-08, the paper finds. However, the experience with past international commodity agreements (ICAs) with price band provisions and stockholding obligations suggests that they had only limited success in reducing the volatility of the prices they set out to stabilise, as well as being prone to many other operational problems. The paper also suggests that as a possible response to apparently inadequate private storage, public sector storage would be costly, ineffective in countering price spikes once stocks are fully exhausted, and would crowd out private storage. Some market-based approaches to countering food price volatility are also examined as alternatives to commodity storage.
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Bibliographic InfoPaper provided by OECD Publishing in its series OECD Food, Agriculture and Fisheries Papers with number 53.
Date of creation: 12 Dec 2011
Date of revision:
volatility; food security; storage; public and private stocks; international commodity agreements; grain prices;
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- Chen, Li-Ju & Ye, Chusheng & Hu, Shih-Wen & Wang, Vey & Wen, Jiandong, 2013. "The Effect of a Target Zone on the Stabilization of Agricultural Prices and Farmers' Nominal Income," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(1), April.
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