International Buffer Stock Agreement


First, we will consider the operation of buffer storage systems that have existed since the 1920s for a number of raw materials such as wheat, tin, rubber, coffee, sugar and cocoa. All of this ultimately failed for one reason or the other, so there are no important examples to consider. Such systems have suffered from some of the same problems that have plagued buffer storage systems, namely problems of maintaining the agreement and converting to substitutes when prices are kept too high. These can take the form of tests aimed at stabilizing prices through the operation of a buffer storage system or by attempts to raise prices by forming a producer cartel and limiting supply through the use of quotas. There are a number of possible problems related to buffer inventory systems, which may include: most buffer inventory systems operate in the same general direction: first, two prices are set, one on the floor and the ceiling (minimum price and maximum). If the price drops close to the price of the land (after z.B. has found a new silver-rich vein), the system operator (usually government) will start buying back the stock to ensure that the price does not fall further. Even if the price rises close to the ceiling, the operator lowers the price by selling its stakes. In the meantime, it must either store the goods or keep them away from the market (for example.

B by destruction). When a basket is stored, their price stabilization can in turn stabilize the overall price level and prevent inflation. This scenario is shown on the right. Like the wheat market, the price of normal crop years (S1) is within the permitted range and the farmer is not obliged to act. However, during the bumper years (S3), prices began to fall and the government had to buy wheat to avoid the collapse in the price; Similarly, in years of poor harvests (S2), the government must sell its stocks to keep prices low. The result is a much smaller price drop. [Citation required] Price stability then led to greater common well-being (the sum of the famous Cambridge economist Nicholas Kaldor revived Graham`s ideas in the 1960s and called for the establishment of an international reserve currency of raw materials – which he called “Bancor” – based on the storage of goods and underlined its power to support developing countries dependent on exports of raw materials. Kaldor reiterated bancor`s request for the dissolution of the Bretton Woods Agreements in the 1970s. Modern economists such as Robert E. Hall and Leland Yeager have continued to propose different aspects of Graham`s plan and the recent resurgence of interest in “healthy money” and economic stability, particularly in the face of the 1997-8 Asian crises and the euro experience, making it as urgent and relevant as ever. A buffer storage system (usually as an intervention tank, “always the normal reservoir”) is an attempt to use the storage of raw materials for price stabilization purposes throughout an economy or in an individual (goods) market.

[1] In particular, when there is a surplus in the economy, goods are purchased, stored and then sold from those stores when economic difficulties occur in the economy. [1] If there is a very good coffee crop, the supply curve will move to the right and the price would fall below the limit.