THREE ESSAYS ON TRADE POLICY, FOOD SECURITY AND PUBLIC STOCKHOLDING IN DEVELOPING COUNTRIES
Date
2016-12-14
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
ORCID
Type
Thesis
Degree Level
Doctoral
Abstract
Public stockholding for food security purposes refers to state acquisition of foodstocks in support of food security objectives. Public stockholding for food security purposes in developing countries returned to WTO agenda in the wake of the 2007/2008 and 2010/2011 food crises. During the WTO Ministerial Meeting at Bali in 2014, a group of developing countries (known as the G-33) proposed that disciplines on stockholding be relaxed to allow them to acquire large foodstocks in anticipation of future crises. They contended that stockholding was necessary because exporting countries often restrict food exports in times of crisis, which consequently affect importing countries’ food security. Food exporting countries, on the other hand, opposed the policy arguing that it could lead to increased subsidies to producers of importing countries and, consequently distort trade. Due to the absence of consensus, a Pease Clause was introduced to temporarily restrain member countries from challenging stockholding activities until a permanent solution is reached. This thesis assessed three issues relating to WTO trade policy, food security and public stockholding in developing countries.
The first paper, presented in Chapter 2, assesses the need for public stockholding in developing countries. In this paper, the research estimates the speed at which markets respond to restore consumption distortions in developing countries. This speed is referred to as market response to consumption shocks. Low responses implies that food security cannot be guaranteed by relying on the international market. Hence, stockholding to support consumption can be legitimate food security policy in these countries. The research is applied to wheat, corn and rice due to their importance in the food security of developing countries. The results shows that markets generally fail to restore close to 60 percent of the consumption distortions, following a shock, in developing countries. This poses a risk to food security without public stockholding. Hence, the study concludes that stockholding will be a legitimate policy to consider in these countries.
The second paper, presented in Chapter 3, also assesses the need for public stockholding for food security purposes in developing countries. However, the research investigates whether or not the current de minimis WTO rules on public stockholding constitute a restriction to food security in developing countries. The research posits that the proposal to relax stockholding policy will be justified if current regulations constitute a restriction to achieving food security. The research is applied to wheat, corn and rice. To analyse this question, optimal public stocks required to achieving food security are compared with WTO allowable public stocks. The policy is restrictive if optimal public stocks is more than stock levels permitted under the WTO. The results found the de minimis policy to be substantially restrictive across some developing countries especially those which demonstrate a high food security risk. Hence, expanding stockholding policy for these category of countries should be considered.
The third paper, presented in Chapter 4, examines the potential impact of stockholding on trade. Stockholding has two important activities that can affect trade: stock acquisition and stock disposal. While stock acquisition can increase trade, the disposal of accumulated stocks from stockholding programs in importing countries could lead to significant trade losses for exporting countries. Food exporting countries are particularly against stockholding programs policy due to these potential negative impacts on their markets. In this paper, a potential public storage policy aimed at meeting 6-months of domestic consumption is applied to rice, corn and wheat in order to gain insights into the impact of the proposed stockholding policies on trade. The research seeks to estimate the maximum impact on trade that can arise as a result of stock disposal and stock acquisition. The results suggest that stock disposal could significantly decrease trade by more than 35 percent. Where stock acquisition does lead to increased trade, the overall negative impact of the policies will be relatively low. Moreover, the impacts on trade are relatively small when the policy is considered for small consumption countries. Thus, stockholding policy can be considered for small countries faced with considerable food security risk without generating significant trade impacts.
In conclusion, the study suggests that stockholding policies can be legitimate for small countries faced with considerable food security risk. Large consumption countries seeking to implement stockholding policies must establish appropriate compensation schemes to minimise their policies impact on affected countries.
Description
Keywords
Trade policy, food security, public stockholding, developing countries
Citation
Degree
Doctor of Philosophy (Ph.D.)
Department
Bioresource Policy, Business and Economics
Program
Agricultural Economics