III - Improvement of the Production-Marketing Process

Summary

Till now we have examined the global institutional framework available for joint co-operation by the primary commodity exporting countries. Our next objective is to discuss the commodities. Countries in the region could examine the extent of cultivation and production of commodities, processing, pricing, financing, trading systems, etc. and should endeavour to utilize joint efforts for attaining optimum benefits in these areas.

Production

The supply of most of the primary commodities is inelastic in the short run. Gestation periods for tree crops such as rubber, oil palm, coffee and coconut are lengthy and therefore supply cannot be easily adjusted to meet demand. On the contrary, the supply of certain commodities such as rice, cassava, sugar, etc. is relatively more elastic. Table 3.1 indicates the change in production of selected primary commodities in developing countries between 1977–1988. The supply of commodities such as sugar, rice, jute and coconut oil have fluctuated during this period. Supply fluctuations affect export earnings and consequently the economies of the countries concerned. If countries in the region could disseminate the information which they possess about future supply movements to the other members, they could jointly effect supply adjustments and thereby minimize price instability. It appears that there is no mechanism for countries in the region to obtain such information from one another regularly. At meetings of FAO inter-governmental commodity groups and inter-governmental commodity associations, such information is made available and steps are taken on the basis of the information. However, these meetings are mostly annual and there is a need for more frequent exchange of information. The organizations responsible for each of the commodities in the countries of the region, such as Ministries of Agriculture or Ministries of Primary Industries, etc. should devise a mechanism to disseminate such information regularly and adjust production programmes accordingly.