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The Role of Storage and Trade in Food Security

P. Lynn Kennedy, Andrew Schmitz and G. Cornelis van Kooten

Abstract

This paper examines the role of storage and trade on food security with respect to milled rice in India for the period 1966–2013. Data on food balances, prices, and population obtained from FAOSTAT allow for the observation of the status quo with storage and trade. Then, using a spatial equilibrium framework, the outcomes without storage or trade are simulated. Our results are consistent with the literature with respect to welfare effects. Storage results in net welfare gains to society, although producers gain while consumers lose. Producers receive a welfare gain from net exports while consumers gain from net imports. From a food security perspective, the use of storage has provided benefits to consumers by increasing stability in the market, as seen through decreased standard deviation in both domestic rice prices and per capita availability. The results are mixed with respect to stability from trade.

JEL Classification: F14; Q17; Q18

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Published Online: 2019-11-05

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