Cost and benefits from regional cooperation on grain reserves: The case of ECOWAS

Lukas Kornher and Matthias Kalkuhl

No 211824, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: In the wake of the 2007/2008 international food crisis, public food reserve re-gained the attention of policy makers. However, they come at high economic and fiscal costs. On the other hand, the imperfect correlation of supply shocks across neighboring countries entails the potential to reduce regional market volatility through intra-regional trade integration and storage cooperation. In this chapter, optimal reserve levels are theoretical derived in order to assess costs and benefits from regional storage cooperation. The model is then applied to the West African region which is in the process of establishing a region-wide reserve. Accordingly, regional stocks under cooperation in an emergency reserve can be 40 percent less than without cooperation. Limited intra-regional trade reduces the need for stock releases significantly. Full market integration would diminish regional consumption variability to 3.4 percent, less than for every other individual West African country, but is not effective in dampening severe supply shortfalls. Cooperation in a stabilization reserve in addition to trade integration has only limited impact on consumption stability, and thus storage cooperation shall be restricted to an emergency reserve.

Keywords: Agricultural and Food Policy; Crop Production/Industries (search for similar items in EconPapers)
Pages: 42
Date: 2015
New Economics Papers: this item is included in nep-afr, nep-int and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211824

DOI: 10.22004/ag.econ.211824

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