Fear of Slump in

Coffee [?]y Surpluses Become an International Problem

lERE are indications that the halcyon days of the world’s post-war coffee market are Prices are threatened by vy over-production in some is. committee representing the ted States and all the Central jrican countries (whose staple )rt mostly is coffee) reported in nary, after a lengthy investiga , that “a growing surplus atens to bring a disastrous slump world coffee prices, unless the Tnments concerned take drastic m.” surplus has been piling up since -1955 —the inevitable result of remarkably high prices of the two or three years.

E law of supply and demand means simply that when the supply cannot take care of de d, a competitive market develops, prices rise. Higher prices en age new and additional pro ton; supplies overtake demand; s fall; production dwindles, ire often than not, the dling process does not begin enough. Whereupon there is rplus, a wild scramble by the us-holders for the shrinking :et —and prices fall with a trous wallop. )duction then falls down below md; prices rise; some producers - fortunes; production rises t. ’ific Islands producers, over the ies, have experienced the pro both up and down, many times, prevent those ruinous, periodic )ses of the markets, the 3rn nations, since the war, by erative government action, have to prevent these economic :ers by purchasing surpluses producers; advancing some to the producers from gov ental funds; stockpiling the ice; then feeding it out gradu nto the markets, in such a way prevent a price collapse; and

received fi^ a \hp r m-nH dS ’ aS

Son nn? 6 Jh dU w

There 5 is enough whS nil

nilpd in wmLb stock-

the the whole world s demand if all the "ne e t 8 ar o TlroX n e wL a C f aSed f ° r one year to produce wheat.

That appears to be what now is happening with coffee. It was expected at first that the coffee situation would be left to cure itself—over-production to be stonned by a disastrous slump in prices. But USA realised that Central America is one of her best markets for manufactured goods; and that, as coffee is the staple crop there, a market collapse would embarrass US manufacturers as well as Central American producers. *

So the plan at the moment pro- Vldes for control b y governments, export quotas, advance payments to coffee-growers, and stockpiling.

World cocoa Production his not yet reached this stage because in-

£ reased consumption® k cocoa Aas

been quite remarkable in recent £ ears - While increasing supplies £ a X? , br^S ht the Price down by nalt m th e last year or two, the rates are still profitable and the in- Platoons are that production still 18 mcreasm g- OECAUSE under free trading there -D is an invariable lag between full market supply and reduc tion of production (thus causing ruinous surpluses, through which whole communities are gravely

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irt), there is an increasing tend cy throughout the world to sub tute international control (ex rt quotas, advance payments, and ickpiling) for the ancient law of pply and demand.

But in this—as in all cases where 1 try to set aside natural laws favour of over-riding State ;ion—there is a weakness, [nternational governmental con >l comes into action only after 2 surplus has been created. To completely effective, it would ye to take control of production, 1 place a limit there, when in national surveys show that world iduction has completely overtaken rid demand.

Jut that, of course, would be an erference with (a) freedom of individual producer and (b) edom of the individual govern nt. For that reason, no Western vernment has been game to kle the problem at the point of duction—although most of them, years, to prevent economic aster, have been taking control the stage where a surplus has

aally developed.

lIS is a good example of how any State interference with the law of supply and demand (that my Socialistic interference) just cally leads on to more and more

control, until the freedom of the individual is lost altogether.

State control leads Inevitably into Socialism; Socialism, of course is the logical precursor of Communism and Communism inevitably becomes Totalitarianism, which is the com plete subversion of the individual to the State.

What starts the process? Human selfishness and greed.

If the individual producer would accept advice and guidance regard ing world markets, instead of rush ing in to grab the largest possible amount of the high prices before the market sags, he could be left free But 90 per cent, of him never does If he wants a sure market, through Government protection, he must be prepared to accept bureaucratic control of production, as well as of marketing. He cannot have it both ways.