Food price stabilization: theory and lessons from experience

Many countries pursue food price stabilization through public grain reserves (also called buffer stocks or strategic grain reserves) or trade policy. Views of the economics profession on food price stabilization have evolved over time, however, with increased skepticism about economic planning and government market interventions since the mid-1980s. Nonetheless, recent spikes in international commodity prices during the Covid-19 pandemic and at the start of the war in Ukraine have stimulated another wave of interest in establishing or expanding strategic grain reserves and food-based safety net programs.

This article reviews the experience with food price stabilization, focusing on public grain reserves and trade policy. We summarize research on the theory of price stabilization and the challenges of stabilizing food prices in the face of volatile international prices, speculative attacks, imperfect information, and political interference. We also include empirical studies of how these programs function in seven countries. The review concludes with a summary of key lessons from country experiences and suggestions for further research.