It has been a pandemic since last time I wrote. A pandemic. We lived through the unthinkable. And it is officially over, although people are still getting covid-19 here and there.

The unthinkable has also happened with my PhD dissertation. It may have real world by-products. And this is because my obsession has landed in a radical proposal: to reimagine commodity markets. This is my first attempt to put it on paper, so please bear with me if it is all over the place.

Commodity markets (coffee, cocoa, metals, etc..) have functioned almost the same way since the late 1800s. Commodity exchanges, privately-owned, intermediate the bulk of primary commodities. Prices are determined in this, maybe the only “perfect competition” market, and producer countries are price takers. Producers are now even more removed from prices due to financialization. And the consequences are brutal in terms of growth, booms and busts impossible to predict, and only benefiting asset owners that trade in the market.

While in the 1950s it was impossible to conceive a different way of trading primary products, but in bulk and without differentiation, today technology and changes in consumer preferences towards variety and specificity, have changed the way that many countries conceive their primary products. Many countries (and companies) are now promoting their coffee or cacao (artisanal chocolate) as luxury goods and they are selling big time.

As no change in those markets was conceivable, the only way for countries to escape deteriorating terms of trade was to diversify into manufactures. Primary products were destined to be a curse that countries had to deal with.

Yet, after 75 years of the same policy recommendation, 100 countries are still commodity dependent. Many have even deindustrialized prematurely. This requires a change in policy guidance that acknowledges and better uses the primary products that fuel the world economy.

This is especially true in a world of global value chains in manufactures. While a consumer may be willing to pay a $1000 for a phone, the producers in developing countries are price takers in a system that ensures that the “cost” of production is the lowest. To put it bluntly, global value chains commodified the production of manufactures in developing countries.

So it seems only reasonable to imagine a transformation in which developing countries actually achieve structural change through using what only they can produce. Processing at the source, using marketing to reach out to consumers that are willing to pay, and slowly fix the biggest market failure ever imagined. It is the only market with quasi perfect competition. Only the consumers (and intermediaries) benefit. The externalities are poverty and inequality. This screams for change.

The moment of a radical change in the way of thinking about these markets may be closer than we think.

First of all, we need to remind ourselves that the structure of the commodities markets is not set in stone. It is a human creation. It is something that could change.

Second, climate change is being affected by the traditional division of labor that send the raw materials to advanced economies, only to be sent back again to be sold at the source. Reducing this in half would certainly contribute to fight climate change. Technologies to make it happen in a sustainable way are not unattainable.

Third, consumers of the future, including my daughter’s generation are not conditioned by a preconception that only products from developed countries are desirable. She prefers a chocolate with a history and a connection, to a European chocolate. This opens the door to private investment in developing countries. It is the market of the future.

Fourth, producers are also starting to realize that the negotiation power can shift. We need countries that see the value of the products and sit at the table with pride and purpose, not to passively wish that their products are bought, in bulk, with close to zero value added.

Fifth, the global situation is leaving little space to donors to contribute in traditional ways. Yet, as the Financing for Development process at the UN calls for, the best way is for countries to rely on themselves in a sustainable way. If primary commodities become processed goods, this may be closer than we think.

This will not be easy. It is a dream, but I am willing to believe that, by dreaming, we can change reality.