Food insecurity: magnitude and remedies

Working Paper
[World bank staff working paper no. 267]

Food insecurity is given an operational definition: the probability of food grain consumption in developing countries falling below a desired level due to a fixed upper limit on the food import bill they can afford and an unfavorable combination of poor harvests and world food grain prices. Quantitative assessments suggest that there is a 7 to 10 percent chance of a consumption1shortfall in excess of 15 million tons. Over the years, the expected shortfall is 4 to 5 million tons. The paper does not explore the whole range of economic and political benefits and costs of food grain buffer stocks, world wide or for individual countries and therefore makes no recommendations about desirable stock levels. However, it is argued that food security should not be made contingent upon arrangements for world wide food grain supply stabilization. It is suggested that food security could be attained through a food import bill insurance (FIBI) scheme. It is estimated that food security could be provided by a scheme with a standby financial capacity of 3 to 4 billion dollars, with expected payments over the years in the range of 200 to 300 million dollars. Alternatively, food security could be attained by a combination of a financial scheme and a grain buffer stock in or on behalf of the developing countries. While a stock operated to stabilize import require- ments is shown to be very cost ineffective, a stock operated to stabilize the import bill (storing when import prices as well as harvests in the countries are favorable) can be reasonably cost effective for a modest size stock operation. It is suggested that a 10 million ton buffer stock operation of this kind could be obtained with an initial investment of about 2 billion dollars (including the construction of storage facilities and the cost of the initial stock). The expected annual cost (amortization + variable storage costs - import cost savings) would be on the order of ' 50 million dollars. A smaller FIBI scheme with a standby financial capacity of 2-3 billion dollars (needed only in rare instances) and with expected payments over the years of 100 to 200 million dollars in conjunction with such a buffer stock could then provide reasonable food security.

Date and language
Jul 1977

Corporate Author

Agris Subject Categories: 
Food Security
Physical Location: 
FPMU Documentation Center
Classification Number: 
Other information
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