Commodity Agreement Explain

Commodity agreements are agreements between producer and consumer countries aimed at stabilizing markets and increasing average prices. Such agreements are common in many markets, including the coffee, tea and sugar market. (4) Mixed producer-consumer interest. The longest agreements at present are products for which the major industrialized countries have rather mixed motivations. Thus, the United Kingdom, as an importing country, is interested in relatively low sugar prices; But as an advocate for Commonwealth countries in the West Indies and Oceania, the UK does not want world sugar prices to fall to catastrophic levels. In the days leading up to Castro, the U.S. was aiming for a higher price for sugar shipments from Cuba to non-U.S. countries. Destinations that even Cubans, a little more impressed by the desire to maintain the volume of exports.

The new coffee agreement also reflects a certain reciprocity of the interests of producers and consumers within the main importing countries: there are no domestic sources of supply, but the industrialized countries of the temperate zone are largely concerned about the well-being of the less developed countries of the tropical regions of Latin America and Africa, which supply the bulk of the world`s coffee exports. Principles that are outdated compared to realities. The chapter of the Havana Charter, which dealt with intergovernmental agreements on the control of goods, focused on provisions intended to benefit the consumer, including through (a) equal representation of importing and exporting countries; (b) the participation of all countries that are ”significantly interested” in the goods concerned; (c) the control of advertising in the form of an annual report; and (d) to ensure increased outlets for deliveries from regions where production is most efficient. The commodity market is particularly vulnerable to sudden changes in supply conditions, known as supply shocks. Shocks such as bad weather, disease and natural disasters are largely unpredictable and cause commodity markets to become highly volatile. In comparison, the markets for finished products obtained from these raw materials are much more stable. There is a great gap between the principles underlying these provisions and the harsh realities of the agreements actually negotiated in the post-war period. The countries of the United Republic continue to vote as exporting countries under the International Sugar Agreement and the International Wheat Agreement, although the dynamics of international trade have recently become a major net importer of both countries. In the current context, the United States, although not itself a member of the ITA, is indeed setting a ceiling for international tin prices by regulating the rate of tin outflow from that nation`s strategic stocks.

As with wheat, the international market was determined less by the IWA than by the oligopolistic pricing practices of the Canadian Wheat Board and the U.S. Commodity Credit Corporation. The accession of a large number of nations to the current international agreements on raw materials can only complicate management and decision-making, while in at least one case – the decision of the United Kingdom not to join the IWA of 1953 – the absence of a large wheat-importing country may have had a salutary effect in moderating the exercise of oligopolistic power. (2) Relatively stable market shares. . . . .