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Strategic food reserves: what would be different this time?

29 October 2009

Implementing global food reserves should be part of a genuine multilateral response to the food crisis. A new Global Convention on Food Security could offer an institutional framework for the governance of food and agriculture, argues a presentation by STWR.

The following article is based on a presentation given by Share The World's Resources at a conference titled Food Reserves: Facing the Hunger Challenge, hosted by the Institute of Agriculture and Trade Policy (IATP) and ActionAid USA. The event took place at the Carnegie Endowment for International Peace, Massachusetts Avenue, Washington DC, on 15th October 2009.

Thank you. Firstly, I would like to thank IATP and Action Aid for convening this event. We are very pleased to be a part of these discussions and have enjoyed the debate so far, and we hope to take this issue forward with many of you in the room. I would also like to express a special thanks to Dr. Daryll Ray whose work has really inspired much of our research and thinking on this issue at STWR.

You are probably wondering why I have travelled here from London, and why a gentleman from the UK is speaking about food reserves on the same panel as Dr. Ray. I work for an organisation called Share the World’s Resources, and we are currently working on the issue of food reserves in the context of a new global governance framework. We are analysing the structural causes of the global food crisis to propose a possible policy and institutional response which we will publish in a forthcoming report. We believe that food reserves can play one part in a policy response to address both the long-terms causes of hunger and the short-term problems of volatility in agricultural commodity markets.

In this presentation I am going to be addressing three things: firstly, the context in which we should be discussing global food reserves. Secondly, the constraints to any implementation of reserves on the international level. And thirdly, I am going to be looking at a potential institutional response, at how stock-holding could potentially work on the international level, and how we can envision a system of global reserves.

The Importance of Context

The first thing that we need to note about food reserves is that context is all-important. Over the previous year, many policymakers have been talking about instituting strategically placed grain reserves, either regionally or globally. However, the ways in which they have been discussing them is essentially quite different with very diverse aims in mind.

From our research, we have seen that food reserves have been discussed primarily in four ways. Firstly, as Daryll Ray has suggested, food reserves can be used for a supply management purpose. This could potentially be coordinated on a global level. This method can address some of the long-term causes of food insecurity, as well as some of the short-term problems of price volatility.

Secondly, reserves have been discussed in terms of emergency humanitarian response. This is actually a distinct issue. The World Food Program and some other humanitarian agencies have specifically called for globally coordinated food reserves to address emergency food situations.

Thirdly, some countries have called for food stocks and grain reserves in the context of export promotion. At the World Grain Forum held in June this year, Russia, Kazakhstan and Ukraine called for a regional trade bloc to promote exports using food reserves.  

Fourthly, some think-tanks such as IFPRI [International Food Policy Research Institute] have suggested that reserves could be used in a ‘virtual’ capacity to mitigate or manage speculation in commodity markets.

We therefore have four distinct ideas and very different understandings of food reserves; for supply management, for humanitarian purposes, to promote commodity exports, and in a ‘virtual’ capacity. So although we have heard much discussion on food reserves and stock management, it is important to note that we may not be speaking exactly the same language. When looking at food reserves as a policy response, we need to analyse the exact details of their implementation and the end aims that they have in mind.

A Two–Pronged Strategy: Supply Management and Humanitarian Response

We believe that strategic food reserves should be used for two purposes. Firstly, they could be used to regulate and manage supply, and secondly for humanitarian reasons. These illustrate two effective responses to the global food crisis in terms of the long-term structural causes and also the shorter-term price fluctuations that we can see on a more superficial level. The two issues are distinct and shouldn’t be confused.

On the supply side, policies to manage supply can tackle some of the long-term problems inherent in food and agriculture, especially the chronically low prices paid to farmers in both developed and developing countries. As Daryll Ray has just explained, they can also be used to address some of the issues of ‘dumping’ [of commodities on foreign markets at below the cost of production] that have been particularly negative for poorer countries. In the short-term, as Sophia Murphy explained to us so accurately, stock-holdings can also be used to address price fluctuation issues in commodity markets, which came about partly due to decades of liberalisation policies and the running down of global stocks.

But how could supply management work on the global level? One idea that has been put forward would be to reinstitute national reserves and then potentially link them to a global coordination agency or multilateral agreement. In practical terms, this appears to be quite difficult to put into place. Even more challenging would be for a single global reserve where governments pool stocks in one location. Although this idea seems preferential in terms of cost and economics, the political obstacles to such a system are formidable.

Distinct from supply management, we may also require some form of globally-coordinated humanitarian reserve.

There are various reasons for why this may be needed. Although humanitarian agencies such as the World Food Programme and others do an excellent job in the field, they face severe constraints. Many of the food aid policies put forward on the national level are slow and unresponsive, and the WFP has to rely heavily on individual contributions. Also, as we saw in the 2008 food price crisis, the World Food Programme was priced out of the market for a lot the staple commodities that it requires for its day-to-day activities.

One policy response that could be proposed to these problems is a series of coordinated humanitarian reserves which are actually separated from the market.

The key question is how this concept could work on an international basis. The World Food Programme already has a humanitarian response system in place to respond to emergency situations, although it is quite small. This idea could be up-scaled and expanded with more support from donor countries.

It’s also important to note here that the World Food Programme or an outside agency should be able to control and manage the food stocks. If a humanitarian organisation has to rely on a multilateral agency to release the stocks it could exacerbate rather than alleviate problems of political interference and slow response time.

In terms of location, reserves should be regionally situated near to calamity prone areas. This is going to be even more important with the effects of climate change, such as increased natural weather problems that could critically affect food supply.

Political Constraints

Although reserves for supply management and humanitarian reasons are needed on the global level, there are serious political, institutional and legal constraints to their implementation.

On the political level, the US and EU progressively moved away from supply side management policies in the 1970s, and as many people have said today, the 1985 and 1996 US Farm Bills really demonstrate this shift. Instead, both regions moved to a situation where they tried to stimulate demand by promoting exports to prop up prices for their domestic farmers. So, if we are going to think about global reserves, we need to look at these EU and US policies of demand stimulation. We can’t talk about supply side measures without looking at this context. Ultimately, the US and EU are unlikely to support any changes that would undermine their export markets.

Perceptions are also important and pose a serious constraint to the implementation of any form of food reserve. Perceptions exist amongst policymakers that multilateral supply management agreements haven’t worked in the past. For example International Wheat Agreements between countries failed from the late 1940s until the 1960s, even though they were largely successful in stabilising prices. The perception that existed was that they were inefficient and costly. In the 1970s, UNCTAD-inspired International Commodity Agreements also stalled; partly due to poor coordination, they were difficult to implement and had a lack of support from both consuming and exporting countries.

Institutional Constraints

So let’s have a look at the institutional constraints – one of the most important points if we are addressing a multilateral structure for reserves. What are the constraints to putting global reserves into place?

The point to make here is that although reserves are clearly required on the global level, we probably do not have the multilateral institutions or the structures in place to immediately implement reserves for either humanitarian or supply management purposes.

UNCTAD [the UN Conference on Trade and Development] could possibly be the best forum to mandate or implement a system of reserves; however, it has been progressively marginalised in the UN system and seriously weakened in the past three decades. Even though it does some excellent work, currently UNCTAD performs more of a low-key advisory role rather than one of intergovernmental coordination.

Internationally, we also have a number of overlapping institutions, mandates and structures that address food, agriculture and trade issues. Some of the UN agencies working on food security actually appear to work in competition with one another rather than in cooperation.

For example, if we look at the reaction to the food price spikes recently, we can see somewhat of a scattergun approach – a large number of diverse agencies and bodies all working in slightly different directions as a response to the crisis. Recently, we have had high-level meetings at the G8, World Bank, UN General Assembly, IFAD, the FAO and a number of other forums.

There has also been the creation of ‘meta-level’ arrangements such as the UN High-Level Task Force [on the Global Food Crisis], and the more recently proposed Global Partnership on Agriculture and Food that was put forward by President Nicolas Sarkozy. So we have a number of different institutions and ‘meta-institutions’ that are essentially working apart rather than in collaboration. It is difficult to see how any of these could implement a series of reserves.

The humanitarian side seems almost more complicated; there is no clear structure to organise or put reserves into practice here either. Many of the discussions and international negotiations on food aid policies have recently moved to the WTO Agricultural Committee, but the WTO is a trade organisation and therefore lacks expertise in humanitarian issues. The same is true of the Food Aid Convention. The Food Aid Convention under the World Grains Council only represents exporting countries and promotes their interests, rather than food aid recipients. Neither forum seems appropriate to mandate or execute the operation of global reserves.

The other issue to address in terms of global governance is that many of the most important actors in the food system are actually excluded from international institutions. Developing countries don’t have a seat at the table at many of the institutions, especially the WTO, where many important food and agriculture issues are discussed. The same is true of non-state actors, which should also have a serious role to play in any institutional response to the global food crisis – farmers’ organisations, trade unions, environmental groups, small-scale businesses, and many others that should be included.

Legal and Economic Constraints

We may also have legal constraints. As many of us have discussed, it is very difficult to conceptualise how reserves for either humanitarian response or supply management could work within the current trade regime. More research is definitely required on this issue. For example, although production limiting is allowed under the WTO Agreement on Agriculture, trade distortion measures are generally disallowed. The WTO also aims to prevent government intervention in agriculture and trade which could pose a major legal constraint to implementing reserves.

Many analysts suggest that cost is also a serious barrier to implementing reserves. If this is the case on the national level, then it could prove even more problematic on the international level. I won’t examine this in too much detail as Daryll Ray has also discussed the issue of cost in detail today.

The Need for a New Compact for Food and Agriculture

You will have to bear with me here, because I am going to offer some idealistic ‘visioning‘ – an idea of what our institutions should look like to help respond to the food crisis, and potentially how global reserves could fit into that framework.

At STWR we have put forward a model or idea, partly stolen from IATP it must be said, who previously looked at the issue of a Global Food Convention or a Global Convention on Food Security, however you want to frame it. 

We should note here that this proposal is obviously not something that we think could be implemented tomorrow, but rather it could be used as a guide to suggest what we want our institutions to look like in the future, how this institution could then run reserves, and a way in which governments could work together.

We believe that we need a new vision for food and agriculture, one that must be based on human rights, multilateral cooperation and effective collaboration between governments. It is only through addressing the challenges that we face with the current institutional framework and global trade architecture that we believe food reserves could actually work.

If we are going to imagine a Global Food Convention, how could we discuss this? What are the pillars that could make this work?

The Three Pillars of a Global Food Security Convention

In terms of operation, a Convention could be built on three pillars: legal, political and technical.

On the legal side, a Food Convention should place the Right to Food at the centre of the international policy debate on food and agriculture. Rather than looking at food and agriculture issues through the matrix of trade, human rights should be the lens that we use to address this issue.

More practically, the Convention could articulate the Right to Food and promote its implementation on the national level. Using the ways that other Conventions have operated as a guide, negotiators could institute a form of committee that governments should report back to on their obligations regarding the Right to Food. For this purpose, the International Covenant on Economic, Social and Cultural Rights provides a good starting point, as does the FAO Voluntary Guidelines on the Right to Food.

Promoting international norms and normative behaviour is also important. A Convention can promote human rights norms and influence government behaviour by its mere existence. This is often called customary international law. The United Nations Framework Convention on Climate Change illustrates a good example of this. For example, activists and citizens domestically were able to use the existence of the climate change treaty to pressure governments at home, even if they were not signatories. You can see evidence of this in Australia and, to a lesser extent, in the US.

For the political pillar, the Convention should be inclusive and democratic. On the state level, representation and decision-making should be shared between both developing countries and developed countries. Non-state actors such as farmers’ organisations, civil society representatives, environmental groups, business interests and consumer bodies should also have key input. The Convention participants could initiate a Secretariat to help this ongoing interaction.

Technically, a Committee could analyse the viability of global food reserves, put forward ideas of how they could work, and move towards their implementation and operation.

Global Food Reserves: One Piece of the Jigsaw

I can only agree with many of the other speakers that food reserves, whether global or national, are no panacea to end hunger or raise prices at the farm gate. They are only one piece of the jigsaw to be used in conjunction with a number of other policy changes that are desperately needed in food and agriculture.

If we are looking at how global reserves should be utilised, the broader aims of any reform efforts should be to manage international trade flows that are damaging to poorer countries, to allow food insecure countries to develop their productive capacity, and to support small-scale farmers. All of these aims should be used as a frame. Food reserves could go some way to achieve these end goals, but they can only be part of a much broader response.

Secondly, if we are seriously thinking about globally coordinated stocks, we probably need institutional reform or even new institutions to implement and operate them. I am offering the model of a Global Convention on Food Security as an idea of what we could look towards, and how reserves could fit into an international system.

The key point of this talk is to suggest that if are talking about reserves, multilateral cooperation is key. We need a true form of cooperation and collaboration between countries to address the multiple challenges in food and agriculture. Food reserves should be used in this context rather than as a form of export promotion or to prop up the existing trade regime that favours developed countries.

The challenges to achieving this cooperation are enormous; however, we do have a notable precedent. In 1943, forty-four government leaders met in Hot Springs, Virginia, to place cooperation and human rights at the centre of a new international framework for food security. The organisation that was created at that conference, the Food and Agriculture Organisation, still exists today. The inclusive spirit that brought world leaders together at that time is a poignant illustration of how governments can put self-interest aside in the name of genuine multilateral cooperation.

I leave you with this slide, one of the articles from this Conference that clearly outlined the idealism and hope that existed for the participants at this event:

“The Primary responsibility lies with each nation for seeing that its own people have the food needed for life and health; steps to this end are for national determination. But each nation can fully achieve its goal only if we work together.” 
-Article V., Final Act of the United Nations Conference on Food and Agriculture, June 1943.

We believe that if we are serious about implementing global food reserves they should be part of a genuine multilateral response to the food crisis based on cooperation between governments, and the ongoing discussion of reserves should be framed in this context.

Thank you.

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