Reporting to a group of experts who provide advice to the European Union on agricultural markets, Professor Christopher Gilbert of Trento University in Italy pointed out that ‘the academic literature is largely negative in relation to buffer stocks.’ This is perfectly true. But this is not in itself an argument. And unless the academic literature is sometimes wrong in its opinion, even if that opinion is the majority view, then there would be no progress in any discipline. Things would not change in the way Thomas Kuhn so ably put it fifty years ago in The Structure of Scientific Revolutions, where a dissenting view slowly bubbles up, causing no more than a ripple on the surface of informed opinion, until the ripple becomes a wave, the wave becomes an irresistible flood and eventually the established opinions are washed away so completely that no one any more believes that they could possibly have held what was once the orthodox viewpoint.
Why is the academic literature, according to Professor Gilbert ‘largely negative in relation to buffer stocks?’ Firstly, we are told, ‘buffer stocks are expensive.’ This is not true. Buffer stocks, in the form we propose, are replenished when prices are low and put onto the market when prices are high. It’s a practice of buy cheap; sell dear. It may not make a profit, but it is not expensive – certainly not in comparison with the millions that are wasted now in providing emergency aid because buffer stocks don’t exist or are poorly stocked.
Secondly, we are told that ‘they crowd out private storage’. This is a very familiar argument used against any ‘intrusion’ into what is believed to be the domain of the private sector. One is elbowing all those fine entrepreneurs out of the way. The opposite is the case. When the public sector becomes involved, it is because the private sector has left a gap. And why shouldn’t it? The private sector doesn’t want to store and manage grain supplies without any assurance that prices will go up rather than down. This ‘crowding out’ argument has appeared again and again – since the time of Keynes a century ago – in order to try to prevent the public sector ‘interfering’ where it supposedly doesn’t belong. The truth is that the public sector needs to get involved when and where the private sector isn’t able to provide the answer. ‘Don’t crowd out the private sector’ is like saying ‘don’t stand on the edge of the pond, you’ll crowd out the fish if they want to go for a walk.’
Thirdly, we are told that ‘price bands are often subject to lobbying by interested parties.’ Of course – so set them up to keep interested parties at bay. For instance, don’t have the price bands within which the price of wheat must be kept determined by farming interests alone. Do as they do is Slovenia where the country’s food reserve is managed by the Ministry of Economic Development and Technology. The agency does have a representative of the Ministry of Agriculture on its administrative board, but he or she is only one of nine. The others include two members of the Ministry for Economic Development and Technology and one each from the Ministries of Finance and Defence.
These arguments have been made many times before and eventually they will become orthodoxy. The academic literature will then become ‘largely positive’ in relation to buffer stocks. If the arguments themselves are valid, then in the end they will prevail, and Kuhn’s ripple will become an irresistible wave. Until then, the prevailing tendency of the literature to be negative about buffer stocks is a source of concern but is by no means evidence that the advocates of stocks are wrong.