Food Security: An Insurance Approach

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Intl Food Policy Res Inst, Jan 1, 1978 - Social Science - 96 pages
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Page 2 - The research presented in IFPRI's Research Reports is conducted at the Institute; however, the interpretations and views expressed are those of the authors and are not necessarily endorsed by the Institute or the organizations that support its research.
Page 95 - The Desirability of Price Instability Under Perfect Competition," Econometrica, 29 (1961), 58-64.
Page 15 - In practice, however, most low income countries could probably not afford to participate unless the scheme were subsidized by developed countries . Developed countries could make their contributions either bilaterally or through a multilateral mechanism. Ideally, developed country assistance would be most effective and desirable from the point of view of recipient countries if it was a collective contribution that would be paid through an agreed upon cost-sharing arrangement . Donor countries could...
Page 14 - In addition to these technical considerations, a scheme with both funds and stocks has the advantage of providing a supply guarantee to back up the financial insurance, and is likely to be preferred by potential developed country contributors. Without a physical reserve, the additional purchasing power acquired by developing countries could, in periods of particularly short supply, pressure developed countries to make politically unacceptable adjustments in their own domestic consumption or cause...
Page 15 - Such a level of funding would assure at least a 75 percent probability of the scheme achieving its objectives. Additional funding of about $2.4 billion would increase this probability to about 90 percent. The share of each country's benefits from the system has also been estimated based on the expected total withdrawals for a given country and the expected total cost of the scheme for the five-year period.
Page 95 - The Consumer does Benefit from Feasible Price Stability", Quarterly Journal of Economics, No.
Page 33 - The striking finding from this analysis is that the total costs of operating the system at various grain reserve levels are not significantly different.! Thus, criteria other than expected cost should determine the choice of the appropriate size of the grain reserve, if any. One such criterion is how well the presence of grain in the system raises the physical availability of grain in every member country to 95 percent of trend production during very high-price years.
Page 13 - The consumption level defended by the scheme at a given year depends on a country's cereal production during that year. Thus, if its domestic production shortfall is more than 5 percent below trend, the country's actual bill would be calculated for the quantity of imports that would maintain 95 percent of projected demand. If the shortfall is...
Page 14 - Some mechanism would have to be devised to tie these funds to the purchase of the specified quantity of grains for food consumption. Since in most years the world price would not be high enough to trigger release of grain from the reserve, the assistance to eligible countries would be in the form of compensatory financing. The wheat reserve would be drawn upon when world market prices exceeded the release price, and would be used only to compensate for production shortfalls of 5 percent or more below...
Page 18 - The two sources of food insecurity in developing, food deficit countries are: (1) a temporary reduction in domestic food production and (2) a temporary increase in international foodgrain prices. The Johnson proposal deals only with the first source of food insecurity and implicitly assumes that food deficit, developing countries can overcome the second source by varying their foreign exchange expenditure on food imports.

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