A World Food Reserve

MAC/WFY

Page-58

0230_553559_10_cha06

National Food Reserves in Developing
Countries

Thus, the focus moved from the perspective of the potential scope and limitations
of a world food reserve to the roles that national food reserves might play in
developing countries. A working party had already been set up by the CSD to
study the possible use of surplus agricultural commodities in building up national
reserves and submitted its report in June 1957.

The FAO report on national

food reserves began with a definition of such reserves for the purpose of the
report as `stocks held or controlled by governments on a continuous basis and
subject to replenishment within reasonable periods' (FAO, 1958b). Three main
roles were identifies for such stocks: as a contingency against local food shortages,
transport problems and other difficulties in internal distribution; as a reserve
against emergencies and other major unforeseen shortages; and as a means to
thwart hoarding and prevent excessive price increases. It excluded stocks in private
hands, or those held by governments for export or for strategic purposes. National
food reserves were thus only part of the stocks held by a national community.
Every community should hold some stocks but not every government decided to
hold food reserves.

But why were stocks needed? After all, stocks meant capital locked up in

uses that were not directly productive. They also needed to be looked after and
involved continuing costs and administrative problems. These were serious consid-
eration, particularly in developing countries where capital was scarce, returns from
productive investment attractive, and administrative problems difficult to solve.
Despite these drawbacks, the FAO report advocated that `every country must hold
stocks of its staple foodstuffs', from one harvest to the next in countries that
produced enough of its own food requirements, and, in the case of importing
countries, for the time until adequate replenishments can arrive and be distrib-
uted. It was good economic policy generally to spread supplies over time as evenly
as possible because sharp peaks and troughs meant extra expense and waste of
resources. The real cost of stock accumulations to a community could not, there-
fore, be judged merely on an accounting basis. If, for example, stocks could be
built up during periods of glut when purchases would help to prevent prices from
falling, and released during times of relative scarcity when prices were high, this
would be a positive benefit to the community. Therefore, it would generally be

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Useful links	A World Food Reserve MAC/WFY Page-58 0230_553559_10_cha06 6 National Food Reserves in Developing Countries Thus, the focus moved from the perspective of the potential scope and limitations of a world food reserve to the roles that national food reserves might play in developing countries. A working party had already been set up by the CSD to study the possible use of surplus agricultural commodities in building up national reserves and submitted its report in June 1957. 28 The FAO report on national food reserves began with a definition of such reserves for the purpose of the report as `stocks held or controlled by governments on a continuous basis and subject to replenishment within reasonable periods' (FAO, 1958b). Three main roles were identifies for such stocks: as a contingency against local food shortages, transport problems and other difficulties in internal distribution; as a reserve against emergencies and other major unforeseen shortages; and as a means to thwart hoarding and prevent excessive price increases. It excluded stocks in private hands, or those held by governments for export or for strategic purposes. National food reserves were thus only part of the stocks held by a national community. Every community should hold some stocks but not every government decided to hold food reserves. But why were stocks needed? After all, stocks meant capital locked up in uses that were not directly productive. They also needed to be looked after and involved continuing costs and administrative problems. These were serious consid- eration, particularly in developing countries where capital was scarce, returns from productive investment attractive, and administrative problems difficult to solve. Despite these drawbacks, the FAO report advocated that `every country must hold stocks of its staple foodstuffs', from one harvest to the next in countries that produced enough of its own food requirements, and, in the case of importing countries, for the time until adequate replenishments can arrive and be distrib- uted. It was good economic policy generally to spread supplies over time as evenly as possible because sharp peaks and troughs meant extra expense and waste of resources. The real cost of stock accumulations to a community could not, there- fore, be judged merely on an accounting basis. If, for example, stocks could be built up during periods of glut when purchases would help to prevent prices from falling, and released during times of relative scarcity when prices were high, this would be a positive benefit to the community. Therefore, it would generally be 58 back to top Next page
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