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Food security and storage in the Middle East and North Africa
 
Author:Larson, Donald F.; Lampietti, Julian; Gouel, Christophe; Cafiero, Carlo; Roberts, John; Collection Title:Policy Research working paper ; no. WPS 6031Paper is funded by the Knowledge for Change Program (KCP)
Country:Middle East and North Africa; Date Stored:2012/05/02
Document Date:2012/04/01Document Type:Policy Research Working Paper
SubTopics:Markets and Market Access; Economic Theory & Research; Emerging Markets; Food & Beverage Industry; Access to MarketsLanguage:English
Major Sector:Industry and tradeRel. Proj ID:1W-Trade And Storage -- -- P121447;
Region:Middle East and North AfricaReport Number:WPS6031
Sub Sectors:Other domestic and international tradeTF No/Name:TF096452-Trade and storage
Volume No:1 of 1  

Summary: In times of highly volatile commodity markets, governments often try to protect their populations from rapidly-rising food prices, which can be particularly harsh for the poor. A potential solution for food-deficit countries is to hold strategic reserves, which can be called on when international prices spike. But how large should strategic stockpiles be? This paper develops a dynamic storage model for wheat in the Middle East and North Africa (MENA) region, where imported wheat dominates the average diet. The paper uses the model to analyze a strategy that sets aside wheat stockpiles, which can be used when needed to keep domestic prices below a targeted price. This paper shows that if the target is set high and reserves are adequate, the strategy can be effective and robust. Contrary to most interventions, strategic storage policies are counter-cyclical and, when the importing region is sufficiently large, a regional policy can smooth global prices. This paper shows that this is the case for the MENA region. Nevertheless, the policy is more costly than the pro-cyclical policy of a targeted intervention that directly offsets high prices with a subsidy similar to food stamps.

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