An International Task Force on commodity risk management is to expand the use of innovative market mechanisms to manage the risk posed by the volatile pricing to key small-scale producers of certain foodstuffs in developing countries.
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The World Bank-associated body wants to stabilise production in commodity markets such as cocoa, cotton, coffee, wheat, soybeans and corn, whose 1983–2003 prices have fluctuated from below 50% to above 150% of their average prices.
At a meeting in Interlaken, Switzerland, the taskforce agreed to build networks involving local banks offering financial risk management funding to producers facing such trends, linked to international insurance markets, via an index-based system effectively pooling commodity price risk.
