In 2008 the International Food Policy Research Institute (IFPRI) in Washington, under its director general Joachim von Braun, produced a paper to deal with high food prices. It was a period of unprecedented spikes in some food prices, with widespread social disturbances that followed in many countries of the world. There was a general sense that world prices needed to be stabilised. The IFPRI policy brief suggested what it called a ‘resilience package’, which included the following action (number 5):
5. Under the current tight market conditions, it is infeasible to accumulate a global stock of grain that would bring the desired calming effect into the markets. The needed incremental supply is missing. Agreements on joint pooling of fixed portions of national stocks at the regional or global level would seem feasible, however. A coordinated set of pledges for a modest grain reserve to be made by the main grain-producing countries (including coordinated releases from the reserve for regional emergencies when prices increase excessively over what market fundamentals indicate) should be established at global or regional levels. A global intelligence network should inform the management of these international coordinated reserves.
There was a degree of hesitancy (some would say realism) in the proposal. It suggests that a global stock of grain which would be used to calm the markets was not realistic. On the other hand, it accepted that the pooling of stocks at a national or regional level was feasible. Later in the paragraph it supports what it calls a ‘modest grain reserve’ with ‘coordinated releases for regional emergencies.’ Here at ACTION for Food Reserves, we would indeed propose such reserves, from which stocks would be released when prices are high and then replenished when they were low, thereby ‘calming the markets’, as the policy brief puts it.
The report points out that ‘such reserves have costs, depending upon their size, which need to be carefully weighed against potential benefits’. Yet these costs are often exaggerated because the stocks are seen more as a way of dealing with emergencies than as a way of ensuring price stability by ‘buying cheap and selling dear’, as ACTION has consistently advocated.
The report recognised that ‘speculation is mainly a consequence, not a cause, of the price crisis, so overregulation and market policing would be inappropriate responses.’ This is an important point. The speculators move in because there is a problem. They do not cause it, even if they exacerbate it. If there is a system in place which minimises price volatility, they will go elsewhere.
As for a’ global intelligence network’ informing the management of these international coordinated reserves, the most important thing is to ensure that they are managed in order to maintain price stabilisation rather than protect vested interests. A global intelligence network might be able to highlight irregularities, but effective political management at the national and regional level is essential.
More than a decade on from IFPRI’s ‘resilience package’, and with food prices threatening to spike again, there are very few countries with sufficient levels of reserves to stabilise prices at the national level, let alone the regional level. There is still a battle to be fought in order to implement proposals that are now over a decade old, in a situation where the crisis that gave rise to them in the first place threatens to repeat itself.