World Grain - March 2014 - 38

FEATURE: government global grain reserves

Why governments
hold grain
●

●

Emergency reserves
# Sudden onset disaster
# Slow onset disaster
# Food safety nets
# Public distribution
system - India
# Subsidized bread -
Egypt, Tunisia, Turkey
Market intervention
# Buying to support farm prices
# Sales to dampen price spikes

private sector imports in an average year
another 2 to 3 million tonnes of wheat.
The government stocks are rotated via
distribution to the poor through a myriad
of programs and as well as through open
market sales if prices rise.
SoutheaSt aSia and auStralia
In Thailand, Vietnam and Myanmar
governments procure surplus rice that
eventually gets exported. In most other Southeast Asian countries, government grain agencies import rice. In the
case of Indonesia, rice importation is
a monopoly of Bulog, but the country
is now on the verge of self-sufficiency
with imports at just 1 million tonnes
equivalent to around 3% of consumption. In the Philippines, the National
Food Agency (NFA) imports some
rice and gives licenses to private companies to also buy.

38

The Thai government has a long history
of buying some surplus rice from farmers
that it has then sold for export. In 2011,
an election year, the Shinawatra government greatly expanded rice purchases at
prices 30% to 50% above international
prices. Forty percent of Thai households
grow rice and the government was reelected, but controversy, scandal and mass
protests have ensued. The Thai government has owned up to a record 18 million tonnes of rice due to its "rice pledging scheme." Thailand produces about
21 million tonnes but consumes only 10
million tonnes. Peak exports were 12 million tonnes but fell to 6.7 million tonnes
two years ago due to the misguided policy.
Many observers expect the government to
fall as a result of the scandal surrounding
its rice buying.
Since Australian Wheat Board's loss of
its single desk status, direct local government intervention in the wheat sector is
minimal, though Australian wheat is purchased by many state-trading enterprises.
middle eaSt and north africa
The Middle East and North Africa
is the world's most important wheat
importing region. It is also the region
where governments are most dominant in procuring and holding food
grains. These countries are the ones
that have been the most aggressive in
recent years in expanding their strategic grain reserves.
The region's imports account for 48
million tonnes of the international wheat

For more information, see Page 94.

trade of 142 million tonnes. These imports are split evenly between the North
African countries and those in the
Middle East.
The bulk of imports are handled by
state-owned grain import monopolies.
The largest government wheat importers are Egypt, Iraq, Saudi Arabia and
Algeria. Government agencies in each
country are major owners and operators
of grain storage facilities, though there
is some reliance on the private sector,
too, especially in Egypt. Smaller countries in the region whose governments
operate wheat import monopolies are
Tunisia, Kuwait and Qatar.
WeStern hemiSphere
The United States has no public grain
procurement or government stocks.
Grain reserves were halted in the U.S. in
1996. The Canadian government gave
up its wheat buying monopoly through
the Canadian Wheat Board in the western provinces just two years ago.
The U.S. government still subsidizes
farmers through federal crop insurance
programs and direct payments costing
taxpayers several billion dollars per
year. And it provides food assistance via
debit cards to 45 million low-income
people. But this is done without government grain buying.
The only Latin American countries
where governments are heavily involved in grain purchasing are Cuba and
Venezuela. In effect, the huge stocks of
high quality grain always available in

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World Grain - March 2014

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