Food security and storage in the Middle East and North Africa, Vol. 1 of 1

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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:	2012/04/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Industry and trade
Rel. Proj ID:	1W-Trade And Storage -- -- P121447;	Region:	Middle East and North Africa
Report Number:	WPS6031	Sub Sectors:	Other domestic and international trade
SubTopics:	Markets and Market Access; Economic Theory & Research; Emerging Markets; Food & Beverage Industry; Access to Markets	TF 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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