Underproduction of primary commodities

Nature

Under-production of primary commodities may exist not only where the share of world exports has fallen because of supply difficulties (as in the case of wheat, coarse grains, rice, and vegetable oils), but also where the price elasticity of demand for a commodity is greater than unity (namely where an increase in the supply would result in a less than proportionate fall in price), so that total sales proceeds would not be increased.

Background

The global significance of underproduction of primary commodities emerged in the early 20th century, as volatile harvests and resource shortages disrupted international trade and development. The problem gained prominence during the Great Depression, when supply shortfalls exacerbated economic instability in both producing and consuming nations. Subsequent decades saw intensified scrutiny by international organizations, as recurring episodes of underproduction highlighted vulnerabilities in food security, industrial supply chains, and the economic prospects of commodity-dependent countries.

Incidence

Examples of under-production are provided by the chronic food shortages in certain heavily-populated developing countries in recent years. In some countries the problem has manifested itself as a failure to maintain exports to traditional markets, which have instead been supplied by developed countries. In other countries, shortages have necessitated heavy imports of essential foodstuffs (chiefly cereals) from developed countries, with consequent strains on the foreign exchange position.

Claim

The underproduction of primary commodities is a critical global crisis that threatens food security, economic stability, and the livelihoods of millions. When essential resources like grains, minerals, and energy are insufficiently produced, prices soar, poverty deepens, and entire nations suffer. Ignoring this issue is reckless and short-sighted; urgent action is needed to boost production, support farmers, and ensure a stable supply of these vital goods for the world’s growing population.

Counter-claim

Some under-production of commodities is desirable as less developed countries divert resources into manufacturing for export. Manufacturers are not as susceptible to price fluctuations and must take a greater place in the foreign exchange earnings of developing countries.