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INADEQUATE SUPPLIES AND PRICE INCREASES
Following a poor production season in 1991-92, genuine gum arabic, of which the sole legitimate source is Acacia senegal, was in short supply throughout 1992. Stocks acquired by importers at $2,300 per tonne before the shortage became apparent, or at $2,500 immediately thereafter, sold at $5,500-7,500 in the second half of 1992. Some buyers, caught with inadequate inventories, despite warnings in 1991 of impending shortages, had to pay even more in the expectation that prices would return to normal when gum again became plentiful early in 1993. They may yet face problems: no gum was shipped from Port Sudan in January. Deliveries are not expected before early March in Europe or late March in the USA and will be on a quota system when they resume. Importers now clamouring for supplies cannot expect to receive, all at once, the total tonnage for which they contracted. Thus the earliest small consignments received may go to buyers prepared to pay a premium.
DEREGULATION REVERSED--AND FURTHER PRICE INCREASES
Uncertainties within the highly competitive, international gum trade reached a climax in December with rumours that Sudanese gum arabic exports were to be deregulated, i.e. the Gum Arabic Company (GAC), formed in the late 1960s would no longer be the sole exporter permitted and therefore able to fix prices. The rumours were received with some credulity. Monopolistic price fixing is against world trade GATT principles; other major Sudanese exports had been deregulated to create more competitive trading conditions, apparently at the insistence of international monetary organizations. At the end of December rumour became fact. Deregulation enabled any Sudanese person to buy and sell gum competitively; the actual producers could export at their own price. But, within a few days, just as importers were negotiating to exploit the new market possibilities, the deregulation decision was reversed! The Sudanese Government had been persuaded to do so because the GAC had contracted in the previous three months to supply the tonnage expected from the 1992-1993 crop; it could not do so if it had to bid at daily auctions against competitors. To induce gum tappers/collectors to maximize this year's production, the GAC then increased the farm-gate price substantially, necessitating that the increased contractual price which it had fixed...