Food Security and Storage in the Middle East and North Africa

Abstract

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 fooddeficit countries is to hold strategic reserves that are called on when international prices spike. But how large should strategic stockpiles be and what rules should govern their release? In this paper, we develop a dynamic competitive storage model for wheat in the Middle East and North Africa (MENA) region, where imported wheat dominates the average diet. We analyze a strategy that sets aside wheat stockpiles, which can be used to keep domestic prices below a targeted price. Our analysis shows that if the target price 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. Simulations indicate this is the case for the MENA region. Nevertheless, the policy is more costly than a pro-cyclical policy similar to food stamps that uses targeted transfers to directly offset high prices with a subsidy.

Agriculture: More Water and Better Farming for Improved Food Security

“…More generally, however, policy making is often still driven by REC authorities, donor agencies, and national governments, with other actors exerting little influence. Lack of dampen price spikes (Larson et al 2014). Because the costs of administering such programs are usually quite high, this type of price stabilization tends to be more expensive than other measures, such as targeted safety nets.…”

Agricultural Policies and Trade Paths in Turkey

“…In addition to its strong institutional ties to Europe, Turkey also has strong trade and cultural ties to MENA, where population growth rates are high and where food production is limited by water scarcity. As a consequence, the region has turned into significant food importer (Larson et al., ). In Europe and some MENA countries, income gains have also driven increased demand for fresh fruit and vegetables and the types of processed food products provided by Turkey's agribusiness community.…”

Food Security in MPC’s

“…A recent analysis argues (Larson et al 2011) that selecting a higher threshold domestic price turns the reserve into more of a safety net to be used in emergency situations rather than as a tool for price stabilization; with a high threshold price, strategic reserves may not have much of an impact on domestic price volatility as long as prices remain below the threshold. The larger the targeted size of the reserve, the more costly it will be to maintain, but the more food-security coverage the reserve will provide.…”