Food reserves in developing countries: trade policy options for improved food security

The food security debate is often posed as a choice between trade and stocks. This paper argues that this approach is misleading since the two strategies can be complementary.

The document points that in general terms, food importing countries will need to rely on a mixture of variable import tariffs and export taxes, together with a food security stock. Nonetheless, the precise nature of the balance will depend on the country’s normal food balance, its grain staple, transport costs and the correlation between its supply and demand shocks and those in the rest of the world. The author also demonstrates these two findings:

• the Asian experience indicates that the private sector can play a substantial role both in crisis avoidance and crisis response
• there is a potential intermediation role for international agencies in crisis situations, considering that contractual performance can be problematic in crisis times
  

Recommendations are that: 

• it is useful to distinguish humanitarian stocks from food security stocks; the latter are directed towards overall availability and the general level of prices in local markets
• it is important that the governments and the agencies work toward increasing private sector’s capacity and improving communication and consultation with it
• the joint proposal for ‘regionally based emergency humanitarian stocks’ launched recently by international agencies is a useful starting point for discussion
• however, it focuses entirely on crisis response without considering how crisis incidence may be reduced, thus it should be remitted for further consideration
• increased transparency, both in relation to food production and stocks, and in the operation of futures markets is beneficial approach
• exporting countries are encouraged to avoid export restricting measures; they make the world market more volatile, and importing countries find grain supplies are unavailable at the time they are required