CFC asked to allocate more on research

JAKARTA (JP): The Common Fund for Commodities (CFC) should allocate more to commodity research and development if it is to help developing countries, seminar members concluded yesterday.

"The CFC still has a future if it focuses its program on financing the research and development of commodities," Budi Hartantyo, a former CFC managing director, told the seminar organized by the Center for Strategic and International Studies (CSIS).

The seminar, moderated by CSIS director Hadi Soesastro, was also attended by senior economists Mari Pangestu and Pande Radja Silalahi.

Many officials and analysts, especially those in developed countries, doubt the future of the CFC, which is bogged down by the sharply differing views of developing and developed countries, said Budi.

"Several developed countries, such as the United States, Canada and New Zealand, resigned right after the financial institution started operations," he said.

He said that the developed countries became CFC members for political reasons. "They don't see it as necessary for their economic interests."

Budi pointed out that the CFC was set up in 1980 but that it only became active in September 1989 due to a ratification delay by member countries. The 102-member CFC, which is based in Rotterdam, the Netherlands, receives its funding from member countries.

Set up as a financial institution for commodities, the CFC has two programs: Funding the buffer stock system for stabilizing commodity prices and financing commodity research and development projects.

The formation of the CFC, he said, was the only concrete outcome of the so-called North and South dialog that took place between developed and developing countries in the 1970s.

Mari Pangestu said that the buffer stock system has no future because it is regarded as an intervening force. "The developed countries do not agree with the kind of intervention which goes against the market economy," she said.

She added, however, that the CFC might survive if it focuses on research and development projects that are mutually beneficial. Then the developed countries will be willing to participate, she said.

According to Budi, the CFC has never been effective in stabilizing commodity prices. However, he said, its studies on the processing of jute and rubber were successful.

"The technology for jute processing has been applied in China, while the technology for processing rubber is regarded as environmentally friendly," he said. (13)