Compromised in the 1980s by the neoliberal supporters of “zero stocks”, storage policies are back on centre stage as an essential mechanism for market regulation and food security following the 2008 food crisis. As demonstrated by Dr. Rui Luis Silva, Director of Agriculture and Rural Development at the ECOWAS Commission, and Roger Blein, consultant to the Office of Issala French studies, in an article published in Grain de Sel1
the process for rehabilitating stocks2
began in 2004 in West Africa, following the food crisis in Niger. We recommend reading this article3
, which on the one hand underlines the need to extend the use of stocks to the regulation of market prices, and on the other hand highlights the need to define the rules for implementing and managing stocks to ensure their efficiency and sustainability.
momagri Editorial board
The 2000s, the first questions.
National security stocks (of around 30 000 tonnes per country) were devised in the 80s to face major production crisis. They ensured food supplies pending the delivery of international food aid. [...] Two arguments arose in the late 90s.
The first was from aid agencies and questioned the cost and appropriateness of physical stocks, given market evolution and the gradual opening of the Sahelian countries. This was followed by the development of financial stocks or reserves that enabled public purchasing power, when necessary.
The other came from West African governments. They believe that nothing can replace physical stocks and that it is simply a case of increasing volume to account for population growth. Particularly, they believe that the operating rules are too strict and restrict the use of stocks and their capacity to respond to crises. Finally, they want stock to play a role in regulating prices. Donors are unwilling to engage in this approach under the principle of non-government intervention in markets. There is a divide between governments and the international community. [...]
And then, the electroshock.
The food crisis of 2004-05 in Niger served as an illustration in two respects. Firstly, it highlighted the gradual increase in the difficulty to accessing food caused by the difference in household resources and food prices. In other words, we were no longer just dealing with production deficits. Secondly, the response to this crisis was greatly complicated by the difficulties faced by the government of Niger, the WFP and NGOs in acquiring grain intended for assisting people.
The 2008 crisis caused by soaring prices and supply disruptions in global markets eventually rehabilitated stocks as a tool for food security, but it failed to bring together the proponents for security stocks used only in the event of a severe crisis, and the supporters of stocks used for regulating market prices. This debate also reflects a wider divergence on the role of public intervention; West African countries consider that the liberalization of agricultural policies has not triggered the virtuous circle promised by international institutions. Today most West African countries have re-launched their storage policy in response to the food crisis of 2008. [...]
Stocks in West Africa: addressing the causes and consequences of crises.
The agricultural policy of ECOWAS - the ECOWAP - is a reflection of the dual regional ambition: to have security stocks to face food crises, and implement intervention stocks to help stabilize prices. [...]
The West African regional vision is based on the following analysis: price stabilization is a key element for encouraging producers to invest in and intensify production. It is also crucial to giving vulnerable populations access to food. With other instruments (particularly instruments for stabilizing border prices), stocks should help to mitigate price volatility and contain prices within a range that simultaneously ensures proper remuneration of producers and affordable prices for consumers. [...]
Concerning security stocks, the ECOWAS approach is based on the establishment of three additional lines of defence to meet food crises of increasing magnitude. The first line consists of local stocks at the village or community level. These have two advantages: they are tools controlled by local communities, and if properly managed, they can be mobilized very quickly as they are very close to the households in difficulty.
The second line of defence consists of national security stocks. ECOWAS and WAEMU are engaged in a strategy of building up these stocks, particularly in countries that do not have any. [...]
Finally the third line of defence is for regional security stocks. The G20 initiative of 2011 to support the establishment of strategic humanitarian stocks, making West Africa a pilot region in this field, has led regional institutions and actors to accelerate with plans for regional stocks. [...]
There are many obstacles to overcome before we see regional stocks capable of responding to the food crises facing the region. The principle under which regional stocks can be used when local and national stocks can no longer is essential. But this also means that in the event of major crises, needs are considerable and costs are high. Moreover, the fair use of regional stocks between countries, assumes that they all have local and national security stocks. This is hardly the case today. Therefore setting up the rules for the implementation and management of regional stocks (which products, the volume, the criteria for release, which reconstruction methods, cost allocation, the proportion of physical stocks and financial stocks, the type of governance, etc..) is a crucial step that should enable the stocks to be managed on an independent basis, without political interference which would be fatal for the sustainability the system.
1 Nb 54-56, april – december 2011
2 Following the Structural Adjustment Programs implemented by the International Monetary Fund (IMF) and the World Bank (Washington Consensus)
3 To read the full version of the text, please see : http://www.inter-reseaux.org/IMG/pdf/GDS54-56_Cereales.pdf