LAUNCESTON, AUSTRALIA – Live and don’t learn. That should be the motto of commodity producers who attempt to push prices higher by trying a variety of methods to restrict supply.
While the call by major producers including Saudi Arabia and Russia to freeze crude oil output at current levels is the headline of the week, it’s merely the latest in a long line of attempts to arrest sliding commodity prices.
In recent years various governments, producer bodies and even companies have tried to influence commodity markets in their favor, mostly with only very limited success.
Thailand tried to push Asian rice prices higher in 2011 by restricting supply in the mistaken belief that this would allow the government to pay for a generous subsidy scheme for farmers.
Not only did the plan fail miserably, with rice prices actually falling after a short-lived boost, it led to democratically elected former prime minister Yingluck Shinawatra being ousted by the military, a massive build-up in rice stockpiles and the loss of Thailand’s status as the top global exporter of the grain.
But the rice experience didn’t stop Thailand from trying to boost the price of natural rubber, with the military government last year buying up supplies from farmers in order to restrict the amount reaching the open market.
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