Policy responses

Public stockholding (including domestic production and/or imports), operation of STEs for procurement, and release of stocks to the market
- China: operation of National grain reserve systems and STEs (together with bumper harvests) helped China escape steep price increases; report to have held large stocks of rice (roughly 18 - 20% of total consumption)
- India: record purchase of rice in 2008 created opportunity to release sufficient stock into the market
- Thailand released rice stocks worth 25% of annual consumption, to be sold at 15-20% below market prices)
- Phillippines (middle-income country, largest rice importer): increased imports in a bid to ensure at lease 30-day stockpile
- Saudi Arabia (major rice importer in the Middle East): proposed measures to increase strategic stock levels to cover between 6-8 months of national consumption requirements

Links and references

http://www.fao.org/fileadmin/user_upload/ISFP/pdf_for_site_Country_Response_to_the_Food_Security.pdf

Pros Short-run impact of stock release: increases domestic availability and can help to contain price increases or even lower prices.

Cons Short-run impacts of stock purchases: increasing stock building, including through imports, during high or rising food prices can increase global demand, lowering available supplies on the market and contributing to higher food prices; stock purchases only effective if done in a period of low food prices. Medium to long-run impacts of stock release: sudden flood of supplies on the domestic market can create disincentives for producers to invest in those crops in the next production cycle/ may reduce planted area (particularly without adequate information about national stocks). Exporters/ producers in third countries that typically supply this market may also be worse off and may also lower their production in the next season if there are perceived to be no markets for their products