POLICY IMPLICATIONS OF PRICE DYNAMICS AND THE WAY FORWARD - Food Security, Food Prices and Climate Variability - page 180

If a country is using trade instruments to reduce price volatility, information on the likely
supply of food several months in advance can be helpful in formulating and articulating its
trade policy. This information can be useful for estimating regional food availability and the
likely cost of goods from regional trading partners. It could also allow for more quantitative
assessment of the likely need to go to international markets for food. Integrating price impacts
of supply and demand due to weather-related drivers can be a powerful tool to garner more
value from existing agricultural monitoring information.
Use of integrated price-production information can be better leveraged with information
about where food is imported from during different years. During times of plenty, a country
may have different trading relationships with its neighbors from during times of scarcity.
Research presented in this topic has showed that trade lows can change dramatically across a
dense network of markets due to weather-related production shocks as well as other external
shocks (Brown et al ., 2012; Essam, 2013). Improved trade information that can provide intel-
ligence on the movement of food will allow for the development of strategic information that
can improve the implementation and impact of trade policies.
Food storage policies
Although the purchase and storage of grain in good years and subsequent release in bad years
can be an effective strategy for ensuring a stable supply of food, it is also very expensive. The
cost and logistical complexity of grain storage systems implemented by governments has been
discussed by many, with the result that countries now receive policy guidance to use other
means to reduce price volatility (Miranda and Helmberger, 2012; World Bank, 2012; Wil-
liams and Wright, 1991). Storage can be effective in reducing the impact of very high food
price changes on poor populations, increasing welfare of the community, but it tends to
crowd out private food traders who may store food for profit, affecting the functioning of
commodity markets that are already thin for other reasons (Gouel, 2013). Despite this, many
countries have retained at least a partial food storage system and use it to increase public
welfare. Although India has managed to prevent any major food crises over the past 40 years,
its storage policy could be improved with clearer release rules and a stronger response to
protect the poor in bad years (Busu, 2010).
Explicit information on what food is being produced where, and linking information on
the impact of significant anomalies on food prices can be integrated with storage policies. A
inding of this topic is that local food production and local food prices vary across a country,
with impacts on food security that can be intense locally. Dynamically changing purchasing
power due to demand shocks and weather events can be linked to observations of agricultural
performance and be very different from one region to another in a country (Sen, 1981; Alder-
man and Haque, 2006). Government-run storage systems can be changed to respond to these
local variations in ways that national trade policies cannot. Even with such changes, storage
systems will be inherently expensive and logistically challenging.
Public social safety nets
Grosh et al . (2008) state that rising food prices harm public welfare and development in four
ways: by increasing poverty, worsening education outcomes, reducing the utilization of
education and health services, and depleting the productive assets of the poor. Since the