Buffer Stocks against Inflation

The build-up of national, regional and global public buffer stocks for food can help stabilise prices on global agricultural markets and limit inflation, analyses the renowned economist Isabella Weber together with Merle Schulken in the study "Towards a Post-neoliberal Stabilization Paradigm for an Age of Overlapping Emergencies: Revisiting International Buffer Stocks Based on the Case of Food" that was commissioned by the Heinrich Böll Foundation, Rosa Luxemburg Foundation and TMG Research. The establishment of public buffer stocks for food can also counteract social inequality. Furthermore, buffer stocks secure the physical availability of key staple foods, minimising the risk of shortages and promoting food security. Stocks that are explicitly created to increase food securitycan help to balance out short-term fluctuations in price and volume (for producers and consumers alike) and limit price peaks.

In this policy paper based on the study, Isabella Weber, Merle Schulken (both University of Massachusetts Amherst), Lena Bassermann (TMG), Lena Luig (Heinrich Böll Foundation) and Jan Urhahn (Rosa Luxemburg Foundation) conclude that public buffer stocks for food, if linked  with the right incentives by states, can help to transform food systems. For instance, public procurement of agricultural commodities can be linked to diversified and agroecological cultivation. The procurement of agricultural goods can, for example, be linked to reduce the use of synthetic fertilisers and chemical pesticides, or to the use of open pollinated seed varieties that are adapted to local conditions. Purchasing a wide range of storable agricultural commodities would secure incomes for regional producers and diversify cultivation, on the one hand, and reduce the need to import staple foods on the other, making economies less dependent on volatile markets.

The United Nations Food and Agriculture Organization (FAO) could be tasked with the global coordination of a public buffer stocks for food system. Stocks for key staple foods such as maize, rice, wheat, vegetable oils and other products could be set up at strategically important locations. In times of sharp price increases, a decision could be made to release stocks and thus stabilise prices.