No buffers for the Bank?

The President of the World Bank, David Malpass, published a blog on February 1st about the lack of food security in the world. The blog had previously been an article in The Guardian. One sentence stood out: ‘The time is long overdue to shift to practices that safeguard and increase food and nutrition in ways that will endure.’ Yet despite this laudable intention the blog made no mention at all of the need for buffer stocks. Why?

There was mention of restoring landscapes, diversifying crops and developing climate-resistant agriculture techniques, all things that can help in the medium term. In another blog by Mark Lowcock (United Nations) and Axel van Trotsenburg (World Bank) a day later, there’s mention of cash transfer programmes. That’s governments giving cash to poor people to help them through a bad patch.  Cash transfer can be nothing more than an emergency sticking plaster. One is reminded of the old saying that if you give someone a fish you feed them for a day, but if you teach them how to fish you feed them for a lifetime. The world needs permanent solutions to food shortages, not sticking plasters. Buffer stocks provide a means of reducing the volatility in food prices that will help to eliminate the need for sticking plasters on a problem that those who work for the World Bank seem unable to solve. Why?

A clue is given where Mr. Malpass writes that: ‘The first priority is enabling the free flow of food.’ This is true when it’s a matter of restoring supply chains that have been interrupted by the pandemic. But he then goes on to talk about ‘credible and transparent information about the state of global food inventories – which were at comfortable levels pre-COVID’. Were they? If there had been a system of buffer stocks for these inventories to record, one might believe this. But as our previous blog pointed out, no one is willing to be ‘Just in case’ rather than ‘Just in time’ when it comes to the provision of food.

David Malpass continues by saying that ‘unequivocal free-trade statements from the G20, World Trade Organization, and regional cooperation bodies helped reassure traders.’ And here’s the rub. Though we have argued time and again that a system of buffer stocks uses rather than interferes with the free market, organisations like the World Bank and the G20 cannot accept this simple piece of economics. They think that buffer stocks is synonymous with hoarding (as storing is rebranded) rather than being open to trade. Buffer stocks suggests to them an obstacle in the way of the free market which will somehow make the traders unwilling to trade and the world’s trading system to collapse.

Those who have followed our arguments over the last few years know that we are proposing an intelligent use of market forces, not a way of trying to bypass them. But it seems that for many people, even in the context of a growing crisis, buffer stocks simply cannot be mentioned. Mr. Malpass needs to understand that it is because the World Bank is not willing to invest in buffer stocks that its ‘comfortable inventories’ melt away in a crisis. The World Bank needs to open its eyes to a much more resilient method of confronting the problem of world food insecurity and what we all agree is a very dangerous and worsening situation.