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Copra Price Stabilization Schemes In The Pacific

Several copra producing island countries in the Pacific have operated price stabilization schemes at some time. Experiences have varied from being relati­ vely successful to an expensive disaster. The primary objective  of the schemes is to stabilize  producer prices. Secondary objectives are to maintain income levels in rural areas and maintain production levels to ensure adequate supplies for m arketing boards to meet their contracts. The mechanisms for stabilizing prices have changed over time  as market and economic  conditions  have changed. Marketing boards have tried stabilizing prices at around cost of production levels or at long-term moving average market prices. At other times, marketing boards have set prices  at levels believed  to be adequate politically and socially. Most of the schemes encountered financial problems. Papua New Guinea’s copra stabilization scheme is reviewed in some detail as it is one of the oldest in the Pacific, and it has used a variety of stabilizing mechanisms which other countries have also tried. The scheme’s performnce  is assessed  by reviewing  the stability of producer prices, the scheme’s impact on production  levels and producers earnings, and the efficiency  of its operations . Arguments  against a country having a stabilization scheme are presented and, finally, recommendations are given for countries which operate stabilization schemes.

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