for each of a range of eligible food commodities, internationally owned and
controlled, and with balanced representation of producer and consumer interests?
Buffer stocks would operate by absorbing supplies in times of abundance and
releasing them in times of scarcity. They attempted to prevent or moderate
excessive price fluctuations by buying commodities when prices are relatively
low and selling them when prices are relatively high. The general idea of main-
taining world commodity buffer stocks that would carry productive resources from
periods of relative abundance to periods of scarcity was `an essentially sound one'.
But the situation was rather different concerning the feasibility of combining,
in one WFR, the functions of providing emergency relief, fighting chronic
malnutrition, and stabilizing prices with their conflicting calls for the disburse-
ment of resources from a common pool of resources, which needed continuous
replenishment.
prices, provided that prices were allowed to respond freely to supply/demand
changes in a given market, and provided that there were no other stockholders or
market operators who were even more powerful financially than the international
buffer stock. They could dominate the market by countering the buffer stock's
moves, as could be done, for example, by some strong national stockholding
agency. A buffer stock would be a `highly unsuitable instrument for influencing
longer-term trends in supply, demand or prices'. It might be `a very suitable instru-
ment', however, for provoking or preventing short-term price changes through
additions to, or withdrawals from, the supplies available in the market. It may also
be `particularly suitable' for counteracting the destabilizing influence of short-term
speculative stock movements.
be caused, despite low price-elasticities, by large and sudden variations in prices.
A buffer stock could, in addition, help in smoothing out the effects on the market
of large variations in crop yields or other short-term supply changes due to factors
beyond producers' control. However, it would not necessarily have a stabilizing
effect on producers' income because without any counteracting buffer or control
operation an extra large supply on the market would tend to depress prices and
thus stimulate sales. A short crop would have the opposite effect.
types of multilateral commodity stabilization arrangements other than buffer
stocks were international quota agreements and multilateral long-term contracts.
Quotas tended to freeze the geographical pattern of production and could lead to
unnecessary unemployment of resources. It was better to stockpile a commodity
in times of reduced demand than to limit production. Only where surpluses
could not be dealt with by stockholding, and where the price mechanism would