A World Food Reserve

MAC/WFY

Page-63

0230_553559_10_cha06

National Food Reserves in Developing Countries

all types, both up and down, including fits and starts in the process of economic
development.

Other subsidiary uses

The existence of a national food reserve could also be of help in the operation of
crop insurance schemes aimed at compensating farmers for loss of income due to
crop failures. A national food reserve and a crop insurance scheme might be under
a co-ordinated management so that indemnities could be paid partly in cash and
partly in food stocks. If the reserves could be built up on special terms, this could
help where governments were deterred from establishing crop insurance schemes
by the risk of heavy financial liability in the early years before adequate funds were
built from insurance premiums. But the practicability of crop insurance schemes
in developing countries was limited by various factors including: inadequate crop
reporting methods, complex land tenure systems, lack of trained personnel, and
the ignorance and poverty of farmers. Nevertheless, while such use of a national
food reserve would be secondary, the possibility of initiating such schemes on a
pilot scale should be considered. In addition, a reserve could enable a country to
play the part of a `good neighbour' by assisting a nearby country suffering from
a severe temporary food shortage by sales or loans of food. Some assurance of
reciprocity of such arrangements in case of need would add to security all round.

Multipurpose reserves

As has been shown, a national food reserve could be used for several different
purposes. It would be too expensive to hold a reserve for release only in case
of famine. It should also be available to prevent excessive price fluctuations.
And multipurpose uses would spread the cost of maintaining a reserve and assist
economic development by improving market structure and institutions, including
transportation and storage facilities and the organization of wholesale and retail
trading.

Commodity composition, storage, rotation and costs

It was difficult for governments in developing countries to maintain, administer
and rotate food reserves of varied composition, particularly because of the need
for decentralized storage and multipurpose uses.

In general, therefore, the bulk

of national food reserves were likely to be held in wheat and rice, the composi-
tion determined by consumption habits of the area concerned and their relative
availabilities and prices. Other considerations were that grains went further in
terms of calories per unit cost, and that wheat and rice stored better over longer
periods than other grains. However, food commodities other than grains could
prove extremely useful in emergencies and in reducing the effects of inflationary
tendencies on local prices.

The volume and kinds of food storage capacity available in developing countries

were often inadequate and losses due to deterioration in stores very high. The
important task in a national food storage programme was to hit on the optimum
degree of storage protection and utilization per unit of cost. Labour-intensive

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Useful links	A World Food Reserve MAC/WFY Page-63 0230_553559_10_cha06 National Food Reserves in Developing Countries 63 all types, both up and down, including fits and starts in the process of economic development. Other subsidiary uses The existence of a national food reserve could also be of help in the operation of crop insurance schemes aimed at compensating farmers for loss of income due to crop failures. A national food reserve and a crop insurance scheme might be under a co-ordinated management so that indemnities could be paid partly in cash and partly in food stocks. If the reserves could be built up on special terms, this could help where governments were deterred from establishing crop insurance schemes by the risk of heavy financial liability in the early years before adequate funds were built from insurance premiums. But the practicability of crop insurance schemes in developing countries was limited by various factors including: inadequate crop reporting methods, complex land tenure systems, lack of trained personnel, and the ignorance and poverty of farmers. Nevertheless, while such use of a national food reserve would be secondary, the possibility of initiating such schemes on a pilot scale should be considered. In addition, a reserve could enable a country to play the part of a `good neighbour' by assisting a nearby country suffering from a severe temporary food shortage by sales or loans of food. Some assurance of reciprocity of such arrangements in case of need would add to security all round. Multipurpose reserves As has been shown, a national food reserve could be used for several different purposes. It would be too expensive to hold a reserve for release only in case of famine. It should also be available to prevent excessive price fluctuations. And multipurpose uses would spread the cost of maintaining a reserve and assist economic development by improving market structure and institutions, including transportation and storage facilities and the organization of wholesale and retail trading. Commodity composition, storage, rotation and costs It was difficult for governments in developing countries to maintain, administer and rotate food reserves of varied composition, particularly because of the need for decentralized storage and multipurpose uses. 29 In general, therefore, the bulk of national food reserves were likely to be held in wheat and rice, the composi- tion determined by consumption habits of the area concerned and their relative availabilities and prices. Other considerations were that grains went further in terms of calories per unit cost, and that wheat and rice stored better over longer periods than other grains. However, food commodities other than grains could prove extremely useful in emergencies and in reducing the effects of inflationary tendencies on local prices. The volume and kinds of food storage capacity available in developing countries were often inadequate and losses due to deterioration in stores very high. The important task in a national food storage programme was to hit on the optimum degree of storage protection and utilization per unit of cost. Labour-intensive back to top Next page
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