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Dear Duncan, I sympathise with your uncomfortable position on SM. I will try to nudge you over to my side of the fence and give your bottom a well deserved rest. I don't think that anyone would disagree that if the prices of exported tropical commodities were restored to the real values of twenty years ago - not an unreasonable objective given that demand for nearly all of them has increased significantly over that period - then farmers and the countries that produce them would be massively better off (on the understanding that mechanisms, such as the re-activation of marketing boards were used to counter increasing trader concentration). The increase in income would be much larger than that derived from any other strategy proposed in this forum - hundreds of billions of dollars per year. Such a result can only be brought about by an agreement to reduce production and, consequently, exports - a straightforward market solution as practiced in almost every other industry when prices fall below profitable levels - a solution that we embrace in the Common Agricultural Policy, in the diamond industry, in oil and in many other markets - a strategy that has been used successfully in the past for tropical commodities. The failure of the most recent International Commodity Agreements was due to the withdrawal of support by wealthy nations who were largely responsible for financing and policing them. In addition ICA's could have been better designed - quotas should have been backed up by production cuts not export limits, increased revenue should have been ploughed into vertical diversification, ICA managers should have been given more flexibility, farmers' associations should have been allowed to participate, etc. A better design would have reduced the incidence of cheating and reduced the undue control of importing countries. ICAs did not fail because of any characteristics of how commodities are produced or traded and, apart from the increased power of trading companies (caused, in the main, by the West's insistence on the dismantling of marketing boards - they should have been reformed, not scrapped) the trading system has not significantly changed. The present climate is more conducive for SM than when the ICAs were implemented. The incentive for producing countries to participate in such agreements is much greater given the appallingly low current prices. Associations of farmers who feel the real pain of low prices are not so dominated by government and are more likely to give their support. ICT advances make it easier to administer ICAs. Wealthy importing countries are feeling massive adverse consequences of rural third world poverty - narcotic drugs, emigration, lack of third world markets, political instability, etc. We cannot expect universal participation. There are many non-participants in OPEC and widespread cheating in the CAP and diamond cartel. It may be that agreement cannot be reached with a leading producer of some commodity - although it would be the leading producers who had most to gain from the arrangement - in which case SM in that commodity could not be achieved. Some commodities could not be controlled because they can be substituted with synthetic products. Some, like sugar and cotton can be produced, with massive subsidies, in wealthy countries. Some consuming countries might not be willing to participate but SMs can be implemented within WTO rules by producing countries alone. The Americans might object but they too must be adding up the gains and losses of a poverty-stricken third world. New entrants could be accommodated with the good will of existing producers. But it must be obvious that everyone gains and nobody loses if agreement can be reached. Free riders gain nothing if they destroy such agreements. Rather than concentrating on some hypothetical difficulties we should be vigorously exploring the means by which SM could be implemented. What steps are DFID taking to sound out this idea with their counterparts in consuming and producing countries - all I ever see is a blank refusal even to discuss it? How will DFID ever know how much support for the idea there is when it is properly explained? No one in this forum given any reason to stop taking the idea further. Let me remind you again of some of the possible benefits of SM for cash crops - Significantly higher income for farmers and producing countries. The dignity of working for a living wage rather than relying on sterile aid handouts. The proper participation of developing countries in the world's commercial activity. A low administrative cost-to-benefit ratio - UNCTAD implemented ICAs with only 25 professional staff. Higher prices unlikely to affect demand (the proportion of the raw material cost in the retail price is tiny). The release of some of the best land for food production/lower impact on marginal land. Potential for investment in added-value goods/stimulation of rural industry. Rewards directly targeted at the rural poor. Reduction of narcotic drug production. Reduced urbanisation. Higher political stability. Better markets for goods from other parts of the world. What possible excuse can we have for not pursuing the idea further? Regards - Peter Robbins
Please visit dfid-agriculture-consultation.nri.org.