Examinator, I don’t know what ‘from a solution context’ actually means. It seems to be a meaningless string of words.

Maybe a short digression on the Wool Board/Wool Corporation floor price and its impacts might help make my point. The floor price was brought in initially to smooth out the effects of year to year price fluctuations on wool growers. Many wool growers did not diversify or leave the industry, because they had a guaranteed price (and subject to the ups and downs of weather a guaranteed income). When the Russian wool market collapsed, the Wool Corporation was left with a very large amount of wool and nobody to sell it to.

It wouldn’t have mattered whether other suppliers were covered by a floor price or not. The problem came to a head because demand for the goods collapsed.

No diversification of farming occurred because the scheme allowed inefficient growers to remain in the industry by guaranteeing them an income. It also distorted the relative values of other goods.

Floor prices are indeed a good example of a solution imposed from above. The participants won’t complain of course, because we all like to be given more money, but someone has to wear the cost. In Australia it was worn by growers and the public through direct costs borne by Government and by opportunity costs borne by the agricultural sector.

I see this as a salient lesson in the impacts of fiddling with markets. The outcomes may not be as desired. The Australian wool example is not alone; the EC butter mountain was another. If you artificially raise the price you create opportunities for inefficiency and inhibit growers from reacting to market signals. This is what farming subsidies in the US and EU do now.

There are other types of market intervention we should also guard against. Monopoly buyers is one. This used to be rampant, but is now receding. Dumping is another danger that comes most strongly from large suppliers, like the US and EU, which also have significant farm subsidies. Lastly, there are supply side disasters like Zimbabwe.

I think the following link is worth
looking at:

"Cameroon launches cocoa/coffee fund to boost
production, fight poverty."

Posted by African Press International (API)
on February 2, 2008.
by Tansa Musa.

And I quote:

"The government of Cameroon has launched a fund to
offer cheap credit to cocoa and coffee farmers and
increase their output as part of efforts begun
since 2005 to revive the sector and fight rural
poverty, the fund's administrator said on Friday.

Industry experts in the world's fourth biggest
cocoa grower say the National Cocoa and Coffee Fund
(NCCF) will loosen the grip of unlicensed merchants
on cocoa buying in the interior, by reducing farmers'
dependence on the ready cash they offer..."

It's an interesting article, as are the comments that
follow it.

http://africanpress.wordpress.com/2008/02/02/cameroon-launches-cocoacoffee-fund-to-boost-production-fight-poverty/

Dear Foxy

You link was not found. So unfortunately I couldn't read the article.

I have been thinking about another issue which effects third world farmers and that is while they are growing crops that the multi-national wants they are unable to grow for themselves and their fellow citizens. Also there is the issue of forests and other eco-systems being turned over to large scale farming.

How do we achieve parity between these conflicting systems? Anyone?

Dear Fractelle,

Try the following as listed below:

africanpress - feb.2,2008 - Cameroon cocoa/coffee fund - Yaounde

Let me know if it doesn't work.

Agronomist,
“Solution context means” the post was supposed to stir up possible solutions to the list of problems or how to make my idea better (positive). Not simply to engage in an ideological rhetoric debate.

Secondly look at the situation like this: In capitalism there are two sides to the equation supply and demand.
In the Wool corp. it was the supply side initiating the floor price. The reasons are irrelevant to the point I’m making.

In the cocoa situation there are countries that grow the stuff SUPPLY.
The World Cocoa Foundation (WCF) are default the major cocoa DEMAND (90% of output).
If the WCF as the buyers (demand) agree on a floor price then the price will level at that. in other posts I offered incentives for them.
Obviously it would take governmental support from supplier countries and other bodies to support quotas and diversifying strategies, Gates foundation etc.
Like I said it is the reverse of the normal supplier initiated floor price.
The ‘floor price’ would be independently monitored and would eventually removed after the growing countries had had sufficient time to establish diversified cropping.

A variation of this has been done with coffee but fell over because among other things it was govt to govt (corruption funds miss spent/diverted etc) and didn’t cover all growing countries.

i.e. Starting point for solutions