Can supply management halt the decline in agricultural commodity prices?
The long-term downward trend and variability in agricultural commodity prices pose problems for the agricultural sector and the macroeconomy of commoditydependent developing countries. Declining real commodity prices are seen as the result of the tendency for supplies to increase ahead of demand. This has led to interest in the scope for supply control agreements among producing countries to influence prices, similar to the international commodity agreements of the past. While an agreement among producing countries to restrict supplies may raise commodity prices, the difficulty is to design workable supply management mechanisms and to maintain the commitment of the parties to such agreements.
