The need to maintain stocks of grain in years of good harvests to guard against famine in those years when production falls short of needs has been recognised throughout history. Perhaps the earliest recorded instance was the biblical reference to the build-up of stocks by the ancient Egyptians during seven years of plenty to cover for the prophesied seven lean years.
In modem times the establishment and maintenance of Strategic Grain Reserves, or Food Security Reserves, stems from the events of the early 1970s when a prolonged drought in the Sahel, resulted in a series of disastrous harvests throughout the region. The seriousness of the situation was compounded by a simultaneous world-wide cereal shortage which led to prices rising to record levels. With limited availability and high prices the donor community was only able to provide limited amounts of food aid with the result that many people in the region experienced famine. The effects of these events were also felt in many other countries in Sub-Saharan Africa which, because of scarcity and cost, had difficulty in making adequate provision for needed imports to supplement their own shortfalls in production. To reduce the severity of such events in the future, governments in several vulnerable countries, in consultation with the donor community, embarked on the development of programmes aimed at ensuring an adequate availability of food for affected populations and the development of national food security strategies1 Emphasis was put on propositioning stocks of basic cereals in vulnerable Sahelian countries to be held in readiness for use in the event of future food emergencies. These stocks were not intended to cope with the entire emergency, but rather to provide for the basic needs of the affected population during the lead time required for arranging the availability of alternative supplies. Priority was generally given to ensuring an adequate availability for the urban population, i.e. market dependent population, as it was assumed that the rural population would have retained sufficient stocks, or otherwise made adequate provision for meeting its basic food needs, e.g. through the production of alternative drought resistant crops such as cassava. Subsequently, it was realised that there were vulnerable groups amongst the rural population which should also be included when considering releases from the reserve.
1 The establishment by FAO of the Food Security Assistance Scheme (FSAS) was one of the outcomes of these international deliberations.
Determination of the need for a reserve, its size and the arrangements for its management and operation were set by government, frequently with the help of aid agencies such as FAO and bilateral donors. The physical establishment of the reserve was often an integral part of donor supported programmes aimed at strengthening national food security. Typically an initial quantity of grain would be donated by a donor, e.g. WFP, in the expectation that it would act as a catalyst for contributions from other donors. Grain from the reserve which was sold into the market was expected to be replenished through purchases in the domestic market following harvest by the agency responsible for managing the reserve. Funding for these purchases was expected to come from the monies generated from sales from the reserve. It was also expected that donor assistance would be forthcoming to help replenish those quantities which had been distributed, either free or at subsidised prices, to vulnerable population groups under relief programmes during food emergencies.
Throughout the period from independence until the late 1980s the grain market in most countries of the Sahelian and Sub-Saharan region was strictly regulated by government, with normally a strong bias towards the politically more active urban population. Low consumer prices were maintained by a combination of low producer prices and heavy subsidies. Pan-territorial and pan-temporal pricing systems were the norm for both producer and consumer prices, and private sector participation in the market was actively discouraged. Parastatal companies, or marketing boards, with monopoly rights for the marketing of designated cereals, and in some instances the provision of inputs, were established to administer the system. These companies were also normally given responsibility for managing and operating the reserve stocks1 However, problems faced by governments in providing adequate funds to the parastatals to finance their operations often led to reserve stocks being used for normal market operations. Financial pressures on both governments and the parastatals resulted in insufficient resources being made available to replenish the reserve stocks at the start of the following marketing year. At the same time the donor community, which was facing increasing demands for food aid, was becoming steadily more disenchanted with the way that reserves stocks were being used and was increasingly unwilling to provide the resources necessary for rebuilding stocks. Progressively, the quantities held in reserves dwindled, eventually ceasing to exist in most countries. The Malawian grain reserve was a notable exception to this generalisation as were the reserves held as buffer stocks within the normal operational stocks of the parastatal grain agency, e.g. Kenya and Zimbabwe. Thus, for many countries the strategic grain reserve, while continuing to form an integral part of the government's food security programme, tended to exist in theory rather than in practice.
Following the collapse of the socialist system at the end of the 1980s there has been a general move throughout Africa towards economic restructuring and market liberalisation which has led many countries to introduce policies aimed at deregulating markets and encouraging private sector participation. Cereal markets, traditionally one of the most politically sensitive areas, are increasingly becoming involved in this transition process. Subsidies have, or are being, eliminated and governments are progressively withdrawing from intervention in the market. To encourage private sector participation parastatal grain companies have lost, or are in the process of losing, their privileged monopoly positions and for the first time have to face competition in the market. Prices controls have also been relaxed or eliminated leaving market forces to set prices while other restrictions, which had served as a barrier to entry into the market, have been abolished. However, because of its sensitivity, there is often concern in government circles that a liberalised cereals market, driven by profit motivated private sector traders, would cater adequately for the needs of the population. To act as an insurance against the failure of the private sector to make adequate provision, particularly in times of production shortfalls, there has been a reawakening of interest in government of the role strategic grain reserves could play in ensuring an adequate availability of basic cereals in a liberalised market.
1 Food Security Reserve stocks were established in several Sahelian and Sub-Saharan countries over the period 1975-1980 e.g. Burkina Faso, Mali, Mozambique, Niger, Ethiopia, and Tanzania
The mechanisms required for maintaining and operating a reserve under free market conditions are very different from those which were suitable for a regulated market in which the government, or a government controlled agency, was the only official participant. Due regard now has to be given to ensuring that the basic requirements of a free market are not being violated and that the operations associated with reserve do not disturb the orderly functioning of the market. Clearly, there are several possible options open to governments wanting to make the change from a regulated to a free market and for the manner in which a reserve functions. Countries which already have a functioning reserve (e.g. Malawi and Tanzania) or are maintaining a buffer stock which also serves as a reserve (e.g. Kenya and Zimbabwe) still need to consider the various options available for progressively adjusting the manner in which their reserves operate to meet the changing circumstances as the transition process proceeds. Similarly, those countries which are considering establishing, or re-establishing, a reserve stock need to assess the various options to identify those which best suit their situation.
While they may have similar objectives and common features, the management and operation of strategic grain reserves will differ between countries to take into account their specific circumstances and government policy. Other factors which could also have an influence include: the likely cause and nature of food emergencies and the available mechanisms for coping; the market structure and the effectiveness of market participants to cater for market needs with food emergencies. By presenting various options these guidelines are intended to provide a practical guide for those involved with determining the need, and an appropriate structure, for a strategic grain reserve.
