Preparing for thin cows — Why the G20 should keep buffer stocks on the agenda

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The issue of food price volatility is back on the political agenda of the G20 and the Committee on World Food Security. The time has come to reassess the potential of food reserves in the context of more integrated but also more volatile agricultural markets. On the basis of good practices, it is recommended to experiment with innovative and complementary instruments that can improve the efficacy of food reserves, while at the same time addressing market failures and providing benefits and incentives to small-scale farmers.


Despite their will to demonstrate a strong political engagement, world leaders have struggled to define co-ordinated responses to cope with the effects of the food price crisis. ‘Have we already forgotten the “riots” in Haiti or Africa when prices of certain food products suddenly exploded?’ asked the French President, Nicolas Sarkozy, in a recent speech, before recognising that ‘Between 2008 and 2010, nothing has been done’,1 although the issue had been raised as a priority at meetings of the G8, G20 and the Food and Agriculture Organization of the United Nations (FAO)’s Committee on Food Security (CFS). The underlying causes of the crisis and instruments to cope with food price volatility have been scrutinised by the international community since 2008. But while historically low levels of grain reserves are unanimously highlighted as a major cause of the food price crisis, food reserves have been largely absent from the international agenda – apart from in relation to emergency responses. The option of
establishing national food reserves has been brushed aside using the same arguments that led to their dismantling in the 1990s. Despite the fact that the recent food price fluctuations reflect ‘a collapse in market confidence’, as underlined by Justin Lin, Chief Economist at the World Bank, world leaders are still prescribing the same policy measures to deepen market integration. But what can the market do to feed the people who are now living in extreme poverty because of the global economic collapse? Feeding people who have no purchasing power is not covered by market strategies. Will poor countries be able to buy their food in international markets at times of crisis, when their lack of foreign currency does not allow them to compete with other buyers? Will millions of poor consumers be able to buy food at affordable prices, when biofuel producers and better-off consumers are willing to pay more for the same foodstocks? This briefing paper argues that local and national food reserves can play a vital role
in price stabilisation and food security policies. Food reserves have long been out of fashion. But it’s high time to look again at the evidence. Examples from Indonesia, Madagascar and Burkina Faso demonstrate that if properly designed, national food reserves can be effective. Some G20 countries and international institutions are starting to look at this. It’s high time they all do, without prejudice. Food reserves can indeed be an instrument – when combined with other measures – to support domestic productivity gains, thus lowering net food importing countries’ dependence on international markets and enhancing national food security. Policy makers need to learn from past experience, but solutions also need to be adapted to the context. Regulating markets does not necessarily mean carrying out highly interventionist policies. The time has come to reassess the potential of food reserves in the context of more integrated but also more volatile agricultural markets, and to experiment with innovative and
complementary instruments that can improve the efficacy of food reserves, while at the same time addressing market failures and providing benefits and incentives to small-scale farmers.