Journal of Agricultural & Food Industrial Organization

Published by De Gruyter

Volume 18 Issue 1 - Food Stocks and Food Security: Guest Editor: Andrew Schmitz

January 2020

Issue of Journal of Agricultural & Food Industrial Organization

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Contents
Journal Overview

Editorial

Publicly Available February 11, 2020

Commodity Storage, Price Stabilization, and Food Security

Andrew Schmitz

Article number: 20190053

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Research Articles

November 12, 2019

WTO Rules and Public Stockholding for Food Security Purposes

Ulla Kask

Article number: 20190052

Abstract

The 2007/08 food crisis, which revived interest in public stocks for food security purposes in different parts of the world, has sparked heated debates at every Ministerial Conference of the World Trade Organization (WTO) since the Bali Ministerial in December 2013. At the heart of these debates are the current rules of the WTO that apply to public stockholding and how they limit (or not) the ability of a government to constitute food stocks and pursue its food security objectives. This article discusses the current WTO rules that apply to food stockpiling and the rationale behind them. It describes the current WTO disciplines, notably in the area of domestic support, and examines the different types of support provided by the WTO Members under their public stockholding programs. It concludes by looking at the main arguments for and against the current rules.

Publicly Available November 8, 2019

Is Commodity Storage an Option for Enhancing Food Security in Developing Countries?

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

Article number: 20190054

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Abstract

We revisit the underlying economics of commodity storage and its relation to food security by first clarifying the standard model used to analyze the economic efficiency and distributional effects of commodity storage programs. We find that producers prefer stabilization, although their incomes are more variable, while consumers are indifferent. However, numerical simulations indicate that physical stocks will build up inexorably over a sustained period or the government will need to raise prices continuously over a prolonged period. For the least developed countries facing fluctuating world prices, government should guarantee the price received by producers because, with price uncertainty, farmers could experience losses even under a ‘good’ weather outcome; this would guarantee the producer price, benefitting farmers, while allowing the consumer price to vary with the world price benefits consumers as they prefer price instability. In some cases, however, the government may wish to impose a price ceiling so that households living at or near subsistence can afford to buy grain – an argument based on the grounds of food security. Numerical simulations indicate that such a mixed-price policy increases the wellbeing of both consumers and producers. Physical storage is not a necessity.

Open Access November 12, 2019

Storage Policies: Stockpiling Versus Immediate Release

Justus Wesseler

Article number: 20190055

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Abstract

Storage policies are used in many countries to smooth price volatility and thereby support food security. When there is a global decrease in food supply caused by a number of extreme weather effects, food reserves are expected to reduce the potential negative implications for households with low purchasing power. In this paper, the properties of such a stockpiling policy are assessed and compared to a policy with storage but without stockpiling. The results show that a stockholding policy is an expensive strategy that generates economic benefits only in extreme cases.

November 5, 2019

The Role of Storage and Trade in Food Security

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

Article number: 20190056

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.

December 7, 2019

Effects of Stockholding Policy on Maize Prices: Evidence from Zambia

Yujun Zhou, Kathy Baylis

Article number: 20190057

Abstract

Many countries in the developing world use public stockholding programs to stabilize prices for both farmers and consumers. Governments directly purchase and store staple grains, and then sell them to processors or consumers, often at heavily subsidized prices. Despite the substantial costs of these stockholding programs, little is known about their effectiveness in mitigating retail price swings. This paper estimates the effects of purchase and sales activities of the Zambian Food Reserve Agency (FRA) on monthly maize market prices across more than thirty markets in Zambia from 2003 to 2008. To deal with the endogeneity in purchases and sales, we use predicted FRA purchase and sales targets as instrumental variables. Controlling for other policies, we find evidence that FRA activities stabilize retail prices in major district markets within the cropping year. Results show that FRA purchases raise local prices for surplus maize producers about 5 % on average at the time of harvest, and that FRA sales help lower the prices to consumers during the lean season up to 7 %. However, we find limited evidence that the FRA is able to reduce price volatility between years.

November 9, 2019

Commodity Storage, Post-Harvest Losses, and Food Security: Panel Data Evidence from Ethiopia

Zenebe Gebreegziabher, G. Cornelis van Kooten

Article number: 20190058

Abstract

In Ethiopia, 95 % of total agricultural output comes from some 11 million smallholder farmers. A relatively significant proportion of the food grown in the country is stored at the household level by smallholder farm households, mainly for own consumption. Storage losses, generally perceived to be high, have significant implications for household food security. This study provides a microeconomic perspective of commodity storage, post-harvest losses (PHL), and food security in Ethiopia. It relies on a large-scale household panel dataset, the Ethiopia Socioeconomic Survey (ESS), which comprises 4,000 households in rural areas and small towns that are representative of the most populous regions of Ethiopia. The data were collected as part of the World Bank’s LSMS-ISA project; it involved three “waves” or collection periods: 2011/12, 2013/14, and 2015/16. Data from only the second and third waves were used to estimate a random-effects probit model. Findings show that the magnitude of PHL is substantial: damage is due to rodents and rotting related to traditional storage facilities, poor ventilation, humidity/temperature, and undesirable post-harvest handling. Findings also show that PHL decreases with better market access and improved storage practices. Mitigation measures that improve and promote modern grain storage facilities appear to provide a double dividend – reducing PHL while addressing food insecurity.

November 9, 2019

Farmers’ Grain Storage and Losses in Ethiopia

Fantu Bachewe, Bart Minten, Alemayehu Seyoum Taffesse, Karl Pauw, Alethia Cameron, Tirsit Genye Endaylalu

Article number: 20190059

Abstract

While storage losses at the farm are often assumed to be an important contributor to presumed large postharvest losses in developing countries, reliable and representative data on these losses are often lacking. We study farmers’ storage decisions and self-reported storage losses for grains based on two large-scale household surveys conducted in major agricultural areas in Ethiopia. We show that a relatively large share of grain production is stored by farm households for own consumption and that storage technologies are rudimentary. Farmers’ self-reported storage losses amount to an average of 4 % of all grains stored and 2 % of total harvest. These storage losses differ significantly by socioeconomic variables and wealth, as well as by crop and humidity. We further see strong spatial heterogeneity in storage losses being significantly higher in southwest Ethiopia. Efforts to scale up the adoption of improved storage technologies to reduce storage losses at the farm level should consider these characteristics.

About this journal

Objective
The Journal of Agricultural & Food Industrial Organization (JAFIO) is a unique forum for empirical and theoretical research in industrial organization with a special focus on agricultural and food industries worldwide.

As concentration, industrialization, and globalization continue to reshape horizontal and vertical relationships within the food supply chain, agricultural economists are revising both their views of traditional markets as well as their tools of analysis. At the core of this revision are strategic interactions between principals and agents, strategic interdependence between rival firms, and strategic trade policy between competing nations, all in a setting plagued by incomplete and/or imperfect information structures. Add to that biotechnology, electronic commerce, as well as the shift in focus from raw agricultural commodities to branded products, and the conclusion is that a "new" agricultural economics is needed for an increasingly complex "new" agriculture.

Published in conjunction with the Center for Agricultural and Food Industrial Organization at the University of Nebraska, the Journal of Agricultural & Food Industrial Organization is the only international journal devoted solely to theoretical and empirical industrial organization as applied to agricultural and food systems which link input suppliers, farmers, processors, and retailers. All submissions are reviewed by at least one member of the editorial board, which consists of distinguished economists specializing in food and agriculture, and are guaranteed to receive a decision within 10 weeks, with the first review coming within one month.

JAFIO's mission is to provide a peer-reviewed, scholarly, international forum to address this new complexity with the added benefits mentioned above. Through electronic submission, revision, and publication, manuscripts will no longer become obsolete because of lengthy reviews and/or waiting in the print line, as they often do in traditional paper journals.

What scholars are saying about Journal of Agricultural & Food Industrial Organization

I frequently use this journal for my own research and think of it as a very valuable source for teaching and research.
Hendrik Wolff, Assistant Professor, University of Washington

Topics

Regulatory economics and competition policy
Horizontal and vertical coordination
Mergers and acquisitions
Contracts
Auctions
Product differentiation
Food labeling
Food safety
Cooperatives and strategic alliances
Economics of innovation and property rights
Strategic trade
Market structure and environmental economics
Political economy

Article formats
The journal welcomes empirical as well as theoretical articles, notes, and perspectives. It is expected that both empirical and theoretical contributions are issue-driven, informed by the idiosyncrasies of food and agricultural markets, and have practical relevance to firm strategy and/or agricultural and food industry policy.

Submissions addressing issues which arise in specific antitrust cases in food and agricultural industries, or issues which arise in reconciling antitrust laws with modern industrial organization theory, are also welcomed.

Information on submission process