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Book (stand-alone)International Grain Reserves and other instruments to address volatility in grain markets 2009
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No results found.In the long view, recent grain price volatility is not anomalous. Wheat, rice, and maize are highly substitutable in the global market for calories, and when aggregate stocks decline to minimal feasible levels, prices become highly sensitive to small shocks, consistent with storage models. In this decade stocks declined due to high income growth and biofuels mandates. Recently, shocks including the Australian drought and biofuels demand boosts due to the oil price spike were exacerbated by a seq uence of trade restrictions by key exporters beginning in the thin global rice market in the fall of 2007 that turned market anxiety into panic. To protect vulnerable consumers, countries intervened in storage markets and, if exporters, to limit trade access. Recognizing these realities, vulnerable countries are building strategic reserves. The associated expense and negative incentive effects can be controlled if reserves have quantitative targets related to consumption needs of the most vulner able, with distribution to the latter only in severe emergencies. More ambitious plans to manipulate world prices via buffer stocks or naked short speculation have been proposed, to keep prices consistent with fundamentals. Past interventions of either kind have been expensive, ineffective, and generally short-lived. Further, there is no significant evidence that prices do not reflect fundamentals, including export market access.T his working paper disseminates the findings of work in progress t o encourage the exchange of ideas about development relevant issues. It was prepared as an input for the World Grain Forum 2009 and into subsequent discussions. -
DocumentPrice Volatility in Agricultural Markets
Evidence, impact on food security and policy responses
2011Recent bouts of extreme price volatility in global agricultural markets portend rising and more frequent threats to world food security. To reduce countries’ vulnerability, policies should improve market functioning and equip countries to better cope with the adverse effects of extreme volatility. -
Book (series)The effect of the National Food Reserve Agency on maize market prices in Tanzania 2018
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No results found.Tanzania’s National Food Reserve Agency (NFRA) has a mandate to guarantee national food security through procuring, reserving and recycling grain stocks – primarily maize – and doing so in a cost effective manner. The agency procures maize at set, annual pan-territorial maize prices based on estimated production costs, and distributes maize free of charge or at a discount to targeted vulnerable populations. Surplus stocks are sold in the market, often also at subsidized prices to millers, or at market-related prices to other state or non-state actors. The perception exists that these procurement and sales activities are distortive; hence, this study adopts a time-series econometric approach to modeling price dynamics in selected regional wholesale maize markets in Tanzania with a view to isolate the NFRA’s impact on these markets. Results suggest the NFRA has had an insignificant impact on maize prices during 2010/11–2014/15 despite their pricing strategy and fairly significant presence in at least some regional markets. As such its activities only benefit a select number of maize suppliers, i.e., traders or farmers, or consumers, with limited spillover effects into markets more generally. With this in view, the NFRA should reconsider its strategy of offering a price premium for the maize it procures or selling maize at a discount, even though its mandate of providing subsidized or free maize to vulnerable people is not in question. Current storage capacity expansion plans are also not consistent with the NFRA’s food security mandate.
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