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fm^rmry 15, 1966
«/lMf/C135

Rr. f9ixc9 1* Judd,
Director» Coraioditiee UivisioQ,
mvmi> MnmSf ronfarence <m
Trade «xid SsTeXopment,
Mm York N.I. 10017.

Ssar Mr. J\;^d,
In reply to your r©qu©«t during OMT telaphoias convwreatioti y«eterday«oniinff, I Ml «sadiag you a(mB r^atdts of thr«e calciilations iregarding tb»
affect of buffer stock». All of Hharn tmvm» that sinc« 1950 there m u l d
have been a buffer stock authority buying cocoa vhimamx
tbe price falle
b«low the critical price and selling if it rise» beyond tbat price.
Case 1 takee as t}w critical price the trend values of obeerred prlees in the
paat.
Case 2 takee as the critical price the trend until it fell to $ 550 per tc«a and
than EaaintainB that price.
Case } takes $ 600 instead of 530.
For each case we calculated
(a) the stock for aaoh year since 1950,
(b) the costs of buying additions to stock (minuB selling out of stock) and the
cost of handling these additions and of the oainteoaaee of the etock,
(c) the total amount icaaobilized since 1950 if the btjffer stock had be«tt in
exlstance all the time.
It neem» to a* that carrying a reserre stock (the saw sitcgMtion laBtde) vould
in principle have consequences siallar to cases 2 or 3 d«f«nding on vhAt price
had been taken as the critical one. Depending also on hov m w h the consiaaing
countriee are willing to finance, a price could have bs«i aaintained somewhere
between the lowest price observed and tbs <m»8 taiosn for «cerolses 2 and 3.
Ths effects of an export levy can be calculated along different lines. If you
want us to do so I would like to have a slightly «ore specific indication
about the assunptions to be aade.

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I hope th«e« provlsiotuil reetilts give 3rou scow id«A «e to what we
can do in the field of buffer stocks within the n«xt f«w mmthSt
also for amm BK}re commoditios*

Yoiirs eiucerely,

MTHBBLAiras BccircKic

imnwm

Division of Balanced International Growth

'7 7-

Prof. J. Tinb«rg«n.

15«2-1966

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