Background

My book A Guide to Primary Commodities in the World Economy, published by Blackwell in 1990, is the antecedent to the present work. International commodity issues have been the focus of my professional attention ever since the 1960s, and that book, a broad review of the subject, summarized what I had learnt over the preceding decades. I was pleased with the interest that the book generated and with the positive reviews it received, but its publication clearly had an inopportune timing.

The decades of the 1980s and 1990s can be characterized as a period of indifference, insofar as raw materials go. Real prices of non-fuel commodities had a clear downward trend from as early as 1974 and until 2002. Despite the efforts of the OPEC cartel, long-run fuel prices experienced a trend decline from 1981 to 1998, with a recovery to somewhat higher levels in the following four years, quite modest in the perspective of what would follow.

Through this extended period of doldrums, the supply conditions for most commodities were quite relaxed most of the time. The advanced economies were in a process of dematerialization, where decreasing volumes of raw materials were needed per unit of value added. This suppressed demand growth and reduced the significance of commodities in their macro-economies. While these circumstances prevailed, security of supply assumed a low priority for users. The major problem among producers was to cope with excessive capacity and weak profitability.