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Cost and benefits from regional cooperation on grain reserves: The case of ECOWAS

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  • Kornher, Lukas
  • Kalkuhl, Matthias

Abstract

In the wake of the 2007/2008 international food crisis, public food reserve re-gained the attention of policy makers. However, they come at high economic and fiscal costs. On the other hand, the imperfect correlation of supply shocks across neighboring countries entails the potential to reduce regional market volatility through intra-regional trade integration and storage cooperation. In this chapter, optimal reserve levels are theoretical derived in order to assess costs and benefits from regional storage cooperation. The model is then applied to the West African region which is in the process of establishing a region-wide reserve. Accordingly, regional stocks under cooperation in an emergency reserve can be 40 percent less than without cooperation. Limited intra-regional trade reduces the need for stock releases significantly. Full market integration would diminish regional consumption variability to 3.4 percent, less than for every other individual West African country, but is not effective in dampening severe supply shortfalls. Cooperation in a stabilization reserve in addition to trade integration has only limited impact on consumption stability, and thus storage cooperation shall be restricted to an emergency reserve.

Suggested Citation

  • Kornher, Lukas & Kalkuhl, Matthias, 2015. "Cost and benefits from regional cooperation on grain reserves: The case of ECOWAS," 2015 Conference, August 9-14, 2015, Milan, Italy 211824, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:211824
    DOI: 10.22004/ag.econ.211824
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    Agricultural and Food Policy; Crop Production/Industries;

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