ABSTRACT
The Report of the Independent Commission on International Development Issues (the Brandt Commission) argued strongly for a redistribution of world welfare toward the less-developed countries. Stabilizing world prices of primary commodities is one of the ways the Commission suggested that welfare in less-developed countries could be improved. Most of the Third World’s exports are primary commodities; moreover, many countries are dependent for export earnings on one or two commodities. Commodity prices tend to be volatile. There are fluctuations in demand because of business cycles in the developed countries and because of changes in buyers’ stockpiling policies. There are fluctuations in supply because of the variability of harvests. The Brandt Commission argued that: “Action for the stabilization of commodity prices at renumerative levels should be undertaken as a matter of urgency” (Brandt, et al. [20], p. 158). Historically however, attempts (some sponsored by the United Nations) to secure international commodity agreements to stabilize prices by means of internationally managed buffer stocks have usually not been successful. The Brandt Commission therefore suggested that:
Where international agreements have not yet been established or where they have proved difficult to establish, the availability of finance for national stocking could be beneficial to producing countries in discouraging selling at inappropriate times. Some countries have already undertaken such stocking on their own but poorer countries are unable to afford it. The provision of such finance in particular circumstances, especially to poorer countries, would give further encouragement to national stocking whether through internal or external financing, since greater benefits would accrue to all concerned from the greater price support that would result [20, pp. 152–153].
