From cartels to cooperation in agriculture and metals markets: A century of commodity agreements and their limits

This blog—the last in a three-part series—summarizes key findings from the Focus section of the most recent Commodity Markets Outlook, a flagship report of the World Bank, which dealt with the long history of International Commodity Agreements.

Introduction

For over a century, countries have tried to stabilize the prices of commodities—from coffee, sugar, and wheat to rubber, wool, and metals. Early efforts, mostly led by producers, relied on supply controls. But higher prices kept attracting new competitors, undermining coordination. After World War II, agreements became more inclusive, bringing in both exporters and importers, incorporating instruments such as quotas and inventory management. Even so, nearly all such agreements ultimately collapsed, undone by challenges in enforcement, market dynamics, and shifting global production. What many left behind, however, were lasting industry associations that continue to monitor markets, share data, and support policy dialogue today.

Pre-WWII agreements

More than 20 non-oil agreements and cartels were established before World War II, covering beverages (coffee and tea) and food commodities (sugar and wheat), while others involved industrial commodities, including agricultural raw materials and metals. While a few agreements met their stated goals and were terminated successfully (such as metals and wool), most failed to achieve their objective of stabilizing prices and were abandoned.

Beverages

Brazil, producing over 85 percent of the world’s coffee, launched repeated supply-control programs from 1905 onward. These raised prices but encouraged production elsewhere. After 1929, Brazil’s 1930–37 control scheme failed despite costly stock destruction, and its global share fell sharply. The Inter-American Coffee Agreement (1941–45) raised prices but brought new producers into the market. For tea, producers in India, Ceylon, and the Dutch Indies imposed supply restrictions after World War I (WWI) and introduced a quota-based system in 1933, enforced through the London Tea Auction. Prices recovered, but production expanded in non-participating countries, and the system ended in 1947.

Food commodities

Cuba’s sugar controls (1928) were undermined by rising U.S. and Japanese output. The Sugar Agreement (1931) among seven producing countries to control production helped reduce stocks but collapsed in 1935 due to higher output from non-participating producers, while a broader pact in 1937 was disrupted by WWII and ended. The Wheat Agreement (1933), among 9 exporters and 12 importers, imposed quotas and acreage limits but collapsed within a year due to weak monitoring and bumper harvests. The International Beef Agreement (1937), led by Britain, the largest importer, stabilized prices briefly before being suspended in WWII, with postwar revival efforts failing.

Agricultural raw materials

The market for wool, vital for military uniforms, was managed in both World Wars through intergovernmental schemes. Britain secured supplies from Australia, New Zealand, and South Africa during WWI, stabilizing prices by 1924. Similar arrangements followed during WWII. These are considered successful cases of cooperation, though wool use later declined with the rise of cotton and synthetic fibers. Natural rubber was regulated by Britain (1922–28) to control exports from colonies in Ceylon and Malaysia, but higher prices encouraged production elsewhere. A broader International Rubber Regulation Agreement (1934) sought stability but failed, ending with WWII. Lumber demand collapsed during the Depression, worsened by Soviet exports, and the European Timber Exporters Convention (1935) stabilized markets through quotas until WWII.

Metals

In the early 20^th century, aluminum producers formed a series of cartels to control prices and output. These collapsed due to competition, economic downturns, and both World Wars.  The first copper cartel (1918) used export quotas to liquidate WWI surpluses and disbanded successfully in 1924. A second cartel (1926) ended in 1932 as its influence waned during the Great Depression. Tin was managed through the Bandoeng Pool (1921) to liquidate surplus WWI inventories and stabilize prices and was deemed successful, followed by a series of quota and buffer-stock schemes by the Netherlands and the U.K., all of which failed and ended with WWII. Silver was regulated under the London Silver Agreement (1933), promoted by the U.S. to support domestic producers, but it failed to raise prices and ended in 1937.

Post-WWII agreements

Numerous formal agreements were negotiated during and following WWII under the UN Conference on Food and Agriculture (1943) and the Havana Charter (1948), covering tin, cocoa, coffee, sugar, and wheat, and later natural rubber. Unlike pre-WWII schemes focused on production, these involved both exporters and importers, aiming at “fair” prices through quotas and inventory management. Member countries represented about 65 percent of global production on average (only 20 percent for wheat). While the agreements were longer lasting, all ultimately collapsed—coffee, sugar, and tin in the 1980s; cocoa in 1993; and natural rubber in 1999. Price-volatility outcomes were mixed: lower for tin and wheat, higher for sugar, and similar for others.

Beverages

The International Coffee Agreement (1962) introduced export quotas among producers and consumers, supported by the U.S. and Europe. Viet Nam’s emergence as a major exporter undermined the system, leading to its collapse in 1989. The International Cocoa Agreement (1972) used buffer stocks and export controls but struggled financially and institutionally, as some major producers and consumers were not members. It failed to stabilize prices and ended in 1993.

Food commodities

The International Sugar Agreement relied on quotas, price bands, and stockholding but had limited success. By the late 1970s, the European Community dominated exports, and the agreement ended in 1984. The International Wheat Agreement (1949) used price commitments and intergovernmental trade but failed to stabilize markets. Its effectiveness was further constrained by limited participation. In 1995, the Grains Trade Convention was introduced with broader country coverage, and, unlike earlier efforts, its objective shifted from price stabilization to promoting cooperation, market transparency, and free trade.

Agricultural raw materials and metals

The rubber agreement in 1979 stabilized prices using buffer stocks and a currency-indexed pricing system for key Asian producers. During the Asian financial crisis, the system perversely triggered stock releases despite weak demand and collapsed in 1999 as producers withdrew and released inventories, flooding the market. The International Tin Agreement (1954) initially raised prices, but these encouraged demand substitution and entry of new producers. Unable to finance its buffer stocks, the scheme collapsed in 1985. For aluminum, although formal cartels ended with WWII, coordination persisted until 1978, when aluminum futures trading began on the London Metal Exchange, marking a distinct shift toward more transparent markets.

Conclusion

Despite their poor track record on price stabilization, many commodity agreements left something useful behind by evolving into industry associations. Groups such as the International Cocoa Organization, International Coffee Organization, and International Grain Counsil  preserve institutional knowledge, provide neutral producer–consumer platforms, and remain important sources of expertise within the global network of international commodity bodies and study groups.