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Stabilizing price incentives for staple grain producers in the context of broader agricultural policies

Debates and country experiences








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    Book (series)
    International grain reserves and other instruments to address volatility in grain markets
    Working paper presented at the World Grain Forum 2009 St. Petersburg/Russian Federation, 6-7 June 2009
    2013
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    The dramatic rise in global food prices in 2007/08 was widely viewed as a threat to global food and nutrition security that endangered millions of the world’s poorest and most vulnerable. It has also brought political instability to some countries and the prospect of unrest to many more. The rapid increase in world food prices was caused by a combination of cumulative effects of long-term trends, more recent supply and demand dynamics, and (governmental) responses that have exacerbated price volatility. This crisis has exposed existing and potential weaknesses and vulnerabilities of households, governments, and the international system to food and nutrition insecurity. The international community has responded with a range of initiatives and established instruments to assist the neediest nations. Major stakeholders worldwide continue to discuss potential instruments to address the recent food crisis and to prevent or reduce the impact of future crises. Besides a gricultural productivity improvement and national food self-sufficiency targets, physical grain stocks (“humanitarian food reserves”) have resurfaced in these discussions. And more recently, the idea of “a ‘virtual’ internationally coordinated reserve system for humanitarian purposes”—first mentioned in the G8 Leaders’ Statement on Global Food Security at the Hokkaido Toyako Summit on July 8, 2008—was added to the debate. In conjunction with the St. Petersburg International Economic Forum, the Russian Federation will host, on June 6 and 7, 2009, the World Grain Forum 2009. During the Forum, which intends to shape a common vision of issues facing global food (grain) security and to inform future G8/G20 meetings, high-level discussions are expected to cover—inter alia—global grain production and marketing, food aid programs, new challenges of world trade in grain, and mechanisms for the stabilization of grain markets including an international grain reserve.In vie w of the controversies surrounding the topic of grain stocks and other instruments to reduce price volatility in (food) commodity markets, and at the request of the Organizing Committee of the World Grain Forum 2009, The World Bank (WB), the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) (the three sponsoring organizations) have commissioned the present working paper on international grain reserves and oth er instruments to address volatility in grain markets. The purpose of this paper is to inform international debates on the occasion of the World Grain Forum 2009 on issues and options related to price volatility in (food) commodity markets with special reference to international grain reserves.
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    Innovative agricultural finance and risk management. Strengthening food production and trade in the transition region
    FAO Investment Centre. Directions in Investment No. 7
    2012
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    Ensuring that food production keeps up with population and income growth, changing dietary patterns and climate conditions in the decades to come is but one of the challenges currently facing developing and advanced countries around the globe. The world’s population is expected to stabilize at around 9.1 billion people in 2050, a 30 percent increase from current numbers, but demand for food will grow by 70 percent. To keep up with the pace of demand growth, yields need to improve drastically, y et there is little scope to expand acreage. Transition countries, some of which face food security problems of their own, can play an important role in achieving global food security as yields can be improved. Countries such as Kazakhstan, the Russian Federation and Ukraine, which have been net grain importers up to the late 1980s, can emerge as the world’s leading grain exporters. In order to meet rising food demand, significant investment from the private sector will be required in these tra nsition countries. Such investment needs to be catalysed through supportive policy and regulatory, legal and institutional frameworks. International financial institutions, in turn, can facilitate the creation of these frameworks in transition country governments. This paper focuses on one particularly important action area: how can various agricultural finance and risk management products, mechanisms and institutions that are relatively new to the transition region, enhance the region’s food production, processing and trading systems? These products, mechanisms and institutions include: market-based price risk management, weather index insurance, structured finance and other innovative forms of finance, warehouse receipt (WHR) systems and commodity exchanges. The paper aims to identify how international financial institutions such as the European Bank for Reconstruction and Development (EBRD) can most effectively leverage their investments and technical assistance programmes to boos t the adoption and scaling up of such products, mechanisms and institutions
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    Book (stand-alone)
    The State of Agricultural Commodity Markets (SOCO) 2004 2004
    Technical developments that increase productivity and reduce costs mean that the long-term trend in real agricultural commodity prices on international markets is gradually downwards but that trend is dominated by significant short-term variability. Many developing countries, and especially the least developed countries, continue to depend on just a few agricultural commodities for the bulk of their export earnings. For them, commodity price variability has a strong impact on incomes, employment and government revenues, compromising macroeconomic planning and development efforts more generally. However, developing countries are also as a group increasingly reliant on food imports. The least developed countries are already net food importers. In these circumstances, falling international food prices are obviously beneficial but increasing reliance on imported food also means greater exposure to the variability in international food prices and hence food import bills. Developing countrie s need to contend with variability of international commodity prices in their efforts to increase their export earnings or manage their food import bills. At the same time, they must also contend with the market distortions introduced by the import tariffs and export and production subsidies used by both developed and developing countries, and by the market power in many commodity value chains of large transnational companies. The traditional international responses to commodity market instabili ty based on market interventions or compensation schemes are not currently favoured and new approaches are needed. These new approaches, such as marketbased price risk management, are aimed less at preventing price swings than at helping producers and consumers predict and manage better their adverse impacts.

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