WTO Breakthrough on Stockpiles: Sustaining Food Security

 

 

 

Two Scenarios on Sustainable Stockpiling

With the consensus on the TFA for food stockpiling, it is likely that net food importing countries as well those with large populations will use this new provision to increase their food stockholdings. Whether it is to subsidise food for their lower income population, boost farmer incomes, or stabilise market price volatility, developing countries facing food security concerns will now have an additional policy option without fear of facing prosecution. The question is to what extent countries should stockpile; this will now be an important and increasingly pressing question.

 

Trends after the 2007/08 food crisis, in Asia at least, suggest that importing and highly populated countries are likely to increase their public stockholding. This will have both short and long term consequences for food security, national economies as well as international trade. In the short-run we will see two likely and possible scenarios:

 

On the one hand, the boosting of national stockpiles will help to contribute to better food security outcomes in the countries. With greater control of physical food stocks, governments could use them to correct market failures, increase accessibility, availability and stability in food markets. This would go a long way to fight hunger and malnutrition which is still an everyday reality for close to a billion people worldwide.

 

On the other hand, greater stockpiling will give greater leeway for governments for even greater mismanagement and fraud. History shows that policies like stockpiling and public distribution are prone to corruption and moral hazards within governments.

 

Good Governance and Politicisation of Food?

In the absence of good governance practice, such as transparency and anti-corruption measures especially in the developing world, systematic manipulation of quantity and other aspects of procurement, storage, and distribution, could easily lead to major financial as well as actual food losses. Such problems have been well documented in Southeast Asia and India in the past.

 

Huge public stockholding of food programmes requires equally huge financial resources which will heavily affect the fiscal capacity of the stockpiling countries. Should they choose the path of public stockholding, it is likely this will add to their already growing fiscal deficits. How governments should sustain food stockpiling policies and practices have to be addressed from the very beginning, if possible, to avoid potential problems in the long-run.

 

Lastly, and possibly most importantly, there is a serious risk that stockpiling policies could lead to an even greater politicisation of food security. This could potentially lead countries to fall into a vicious cycle of greater procurement and market intervention, which could dis-incentivise the private sector, leading to even greater justification for food procurement and intervention.

 

The end point of such a cycle would be the government itself emerging as the single largest trader of food. Moving forward, there should be more open discussions on how countries can improve transparency in their stockpile system and how to create sustainable food stockpiling practices.

 

Jonatan A. Lassa is a Research Fellow and Maxim Shrestha is an Associate Research Fellow at the Centre for Non-Traditional Security Studies (NTS) at the S. Rajaratnam School of International Studies Nanyang Technological University.