Final, Analysis of Afghanistan's Strategic Grain Reserve Proposal

Title

Analysis of Afghanistan’s Strategic Grain Reserve Proposal: Prepared for Mike Martin, Director, Office of Agriculture

Authors

Reid Stevens (Principal Investigator), Edwin Price, David Bessler and Kelly Prendergast

Publication Year

2016

Abstract

In 2015-2016, a team from Texas A&M’s Center on Conflict and Development traveled to Afghanistan to assess the feasibility of establishing a strategic grain reserve in the country.

Afghanistan’s Ministry of Agriculture, Irrigation, and Livestock (MAIL) proposes to construct a 400,000 ton Strategic Grain Reserve (SGR). The SGR would have two components: an emergency reserve and an operational reserve. MAIL would use the emergency reserve to distribute wheat to vulnerable groups during major grain market disruptions. MAIL would use the operational reserve to dampen price volatility and support the Minimum Guaranteed Price (MGP) program by making large wheat purchases when domestic wheat prices are low. The proposed SGR would cost $500 million over the first five years, which includes the cost of building storage facilities, purchasing grain, and managing the reserve.

The Texas A&M Evaluation Team suggests narrowing the scope of the SGR policy proposal by eliminating the operational reserve and only creating an emergency reserve. We suggest a small emergency reserve capable of providing wheat for one month to the food-insecure population of Afghanistan, which totals about 9 million people (NRVA, 2012). This would require an 118,000 ton wheat reserve—a 70 percent reduction from the proposed reserve size. To minimize the effect of SGR purchases on the grain market, we suggest filling the reserve slowly over five years, and suggest that purchases for the reserve only occur when domestic wheat production is high. An emergency reserve of this size could be stored in the existing SGR warehouses and silos in Afghanistan and would not require the construction of new facilities.

 

Pertinent Posts