Trying to Get Together

Inspired by the success of the oil producers, many countries are attempting to push up prices of other commodities, either through cartels or by unilateral action. Two current examples:

> Meeting in San Salvador last week, delegates from 38 Latin American and African nations that grow almost all the world's coffee agreed to continue an effort begun last September to try to boost prices by holding 20% of their production off the market. The producers have been stung in the past six months by a 25% drop in world wholesale prices for green coffee, to a barely profitable 520 per Ib. (Retail prices in the U.S. have held at around $1.25 per Ib. because of increases in packaging and distribution costs.) Chief proponents of the partial embargo are Mexico and the Central American countries, whose coffee income has been hit by declining demand and steep rises in the cost of petroleum-based fertilizer.

> Guinea has slapped a tax on bauxite, which will add $40 million a year tot>, the costs of the consortiums of U.S., Canadian, West German, French and Italian aluminum companies that mine the West African country's immense deposits. The tax follows the precedent set by Jamaica last spring, when it increased taxes and royalties on its bauxite by 800%. Guinea plans to use the $40 million to help offset the higher oil-import costs that are squeezing the budgets of, all the less developed countries.

Increasingly, the oil producers will " be moving into countries with development projects like the one announced last week by Guinea: it will join Saudi Arabia, Kuwait, Libya and Egypt in investing $400 million in a joint enterprise that will produce about 9 million tons t> of bauxite ore a year, an amount equal to 150% of Guinea's current output. Like similar deals arranged in the past two years with the Soviet Union and Yugoslavia, the joint venture with the Arabs underscores President Sekou Toure's point that Guinea is becoming less and less dependent on Western companies and markets.

As yet, few of the oil producers' would-be imitators can claim much success. An attempt by several Latin American countries to jack up world banana prices through a universal $1-per-box export tax failed because Ecuador felt that it could not afford to go along. A cartel of four copper-exporting countries agreed last November to try to force up prices by reducing shipments 10%. But demand and prices have continued to fall, and last week the copper countries decided to fight back by holding another 5% of their production off the market. The copper countries are now considering holding more of their production off the market. The real test of the price threat posed by OPEC'S imitators will probably come when the world economy--and demand for raw materials--picks up again.

This file is automatically generated by a robot program, so viewer discretion is required.