Not too long ago, we were one of the very few calling for a discussion of reserves. We were told that we were clinging to the failed policies of the past and that globalization would take care of the problem. Then came 2007 and 2008 and some at the United Nations Food and Agricultural Organization (FAO) gingerly broached the issue as an element of food security, especially for the poorest of the poor. The International Policy Research Institute, better know as IFPRI, proposed a plan that included modest physical reserves along with other mechanisms.

This year Russia was too hot and dry, and we were too wet at the wrong time and prices began to shoot upward. Now we find The Economist and The Financial Times (London) calling for reserves on their editorial pages. It is becoming increasingly apparent that the commercials have no incentive to hold reserves and at times global crop production is not sufficient to meet ever-increasing needs. Thus the need for publicly-held reserves.

As agricultural research continues to push yield levels higher, we need to use years of surplus production to create reserves that will be large enough to maintain a comfortable cushion in the face of simultaneous production problems in two or major exporting areas in the same year.

The presence of reserves will stabilize markets in years of adequate, but tight production, while ensuring against the market disruptions that take place in years where production is inadequate.

While it is obvious how reserves can protect consumers – ensuring them of an adequate supply – farmers are worried that reserves will deprive them of the chance to get a fair price for their crop. We have often heard that reserves overhang the market resulting in prices that are below the cost of production.