Effectiveness of State Trading Enterprises in Achieving Food Security: Case Studies from Bernas in Malaysia and Bulog in Indonesia

The issue of food security is of vital concern to many developing countries and various kinds of policy instruments have been employed to achieve stable food sources for growing demands. One of the most predominant policy instruments in both the developed and developing world involves centralised state trading through what are called State Trading Enterprises (STEs). State trading is more prevalent in the agriculture industry as countries utilise these entities as a means to achieve agricultural policy objectives such as stabilising domestic prices, eliminating marketing inefficiencies and ensuring the availability of food supplies (WTO, 1995). STEs are therefore often an integral aspect of a policy package implemented to address the challenges in achieving the food security objectives of a country. However, although these entities are recognised as an instrument for addressing market challenges, STEs have also been criticised for their distortion of trade and markets through the monopolistic power and government support. Therefore, it is necessary to assess the effectiveness of STEs at achieving the objective of food security, as well as consider the potential market distortions that arise with STEs and the common policies associated with them. This report brings together insights from two STEs in Southeast Asia, namely Bernas in Malaysia and Bulog in Indonesia. Each study offers a historical perspective to the financial, economic and social contributions of the STEs, their effectiveness in achieving the domestic food security agenda and several policy suggestions to mitigate the issues within each country. This report will be broken down as follows: • The first part of this report introduces the case studies by looking into state trading enterprises, food security and the contextual backgrounds of Malaysia and Indonesia’s agricultural policies; • The second portion will present the country case studies that are designed to analyse how state trading enterprises and their associated food-related policies have affected the agriculture and food trade sectors in Malaysia and Indonesia; • Finally, the report will conclude with a summary of the country case study findings and the implications for agriculture and food trade policies in other developing countries

Agricultural Value Chains in India

This open access book provides a clear holistic conceptual framework of CISS-F (competitiveness, inclusiveness, sustainability, scalability and access to finance) to analyse the efficiency of value chains of high value agricultural commodities in India. It is based on the understanding that agriculture is an integrated system that connects farming with logistics, processing and marketing. Farmer’s welfare being central to any agricultural policy makes it very pertinent to study how a value chain works and can be strengthened further to realize this policy goal. This book adds value to the existing research by studying the value chains end-to-end across a wide spectrum of agricultural commodities with the holistic lens of CISS-F. It is not enough that a value chain is competitive but not inclusive or it is competitive and inclusive but not sustainable. The issue of scalability is very critical to achieve macro gains in terms of greater farmer outreach and sectoral growth. The research undertaken here brings out some very useful insights for policymaking in terms of what needs to be done better to steer the agricultural value chains towards being more competitive, inclusive, sustainable and scalable. The value chain specific research findings help draw very nuanced policy recommendations as well as present a big picture of the future direction of policy making in agriculture

Globalization and the smallholders

A major question that has surfaced in the changing context of world agriculture is whether the smallholders would ride the wave of globalization or be swept away. This paper addresses the debate with a four-fold objective: (1) it maps different factors that are likely to impinge on developing country smallholders as a result of globalization in general and of agriculture in particular (2) it briefly reviews literature and summarizes different approaches and methodology used to study this question (3) it identifies areas which have been the focus of attention so far and those that are relatively under-researched (4) it attempts to draw some conclusions regarding the impact of globalization on the smallholders from the literature review, and then suggests some policy implications if globalization is to benefit the smallholders. The paper finds, among others, that studies that focus on trade liberalization alone (operating through price changes) and those that address broader issues of globalization (such as changing structure of food industry and new relationships in the interface of farm and firm, SPS issues, etc.) have run somewhat parallel to each other where a greater integration of the two would be more valuable. Methodological approaches may have something to do with this apparent dichotomy. An important part of this study is to find out from the existing literature whether smallholders have benefited or adversely affected by from the globalization process. There appears to be no clear evidence that smallholders in one region may have done better than those in another. However, even while acknowledging the significant differences within regions themselves, it is evident that whether smallholders have benefited or have been hurt is determined by a fairly narrow range of issues – vertical coordination with processors or exporters, access to infrastructure and finance (credit), role of public sector and international involvement in capacity building, alternatives available in non-farm sector, etc. Based on this, the paper concludes that policy interventions vis-à-vis smallholders should essentially have a twin focus (1) removing the shackles that currently constrain smallholders from exploiting opportunities that globalization presents and (2) ensuring minimum adverse impact, both being two sides of the same coin. While the former can be accomplished through enabling policies, the latter would have to be tackled through coping policies. Particular areas identified as critical enabling factors are greater vertical coordination, removing credit constraints, reducing transactions costs, building social capital, greater role for public sector in providing infrastructure and facilitating institutions and also greater initiatives for international capacity building. On the other hand, coping strategies would include provision of credible safety nets and risk coping instruments, promoting exit options particularly through promotion of opportunities in the rural non-farm sector, guarding against harmful monopolistic competition, and focused research on technologies for small farmers. Needless to say, the relative importance of these factors would vary across regions. It is thus important to identify which battery of policies is appropriate depending on the unique circumstances of each region. It is equally important to draw lessons from the several success stories to be able to replicate these successes on a larger scale in a meaningful way. Only then can small farmers make big gains from globalization.Globalization ,

Storage Matters: Managing Grain, Securing Finance, and Building Markets

This dissertation analyzes the nexus of agriculture and finance, specifically the mediating role of grain storage. How grain markets are organized and governed is foundational to food security. Hundreds of millions of metric tonnes of grain are traded and moved around the world, and hundreds of billions of dollars are invested in grain commodities via global commodity exchanges. During the late 20th century, agricultural commodity exchanges (ACEs) usurped other marketing models such as state marketing boards, and now play an increasingly influential role in global agricultural commodities. The development of ACEs and changes in grain storage over the twentieth century had implications for how financial actors could or could not access grain as a financial asset. To understand grain storage in relation to finance, I examine the governance of storage by developing a political history of storage through the three processes of stabilization – ideational, regulatory and physical. The thesis is guided by a question: How does the examination of twentieth century US grain storage stabilization – the ideas, regulations and physical infrastructures – help us to understand the financialization of agriculture? To answer this question, I draw from international political economy (IPE) scholars and actor-network theory (ANT) to show how the stabilization of grain requires an assemblage of regulations, technologies and economic ideas that make up the politics of grain storage, and how a close examination of grain-storage governance helps to explain the financialization of agricultural commodities. Financialization of agricultural commodities is the work of assembling and turning a bushel of corn, or any other agricultural good – primarily grain – into a financial asset stream. This definition highlights the role that grain storage plays in commodity speculation, and encompasses the mundane practices of collecting and managing amassed grain in containers. This dissertation shows how ideas, regulations, and industrial projects to stabilize and store grain for collateral contribute to the emergence of ACEs as a model of global grain marketing. By looking beyond corner offices, commodity exchanges and other institutions, the theoretical framework brings non-human storage actors into view by drawing attention to the assemblages of grain bins, fumigants, dryers, documents and regulations that attempt to stabilize unruly grains, and to leverage stored grain for credit and asset streams. The research shows a model of agricultural finance that is reliant on grain-storage governance, a constellation of mid-century economic ideas, agro-chemical technologies, and state regulation, and how they are applied to twenty-first century market “problems” in new frontier sites. The research has applications to contemporary global financial inclusion projects that aim to build new agricultural markets and connect small producers to global markets

Agricultural Value Chains in India

This open access book provides a clear holistic conceptual framework of CISS-F (competitiveness, inclusiveness, sustainability, scalability and access to finance) to analyse the efficiency of value chains of high value agricultural commodities in India. It is based on the understanding that agriculture is an integrated system that connects farming with logistics, processing and marketing. Farmer’s welfare being central to any agricultural policy makes it very pertinent to study how a value chain works and can be strengthened further to realize this policy goal. This book adds value to the existing research by studying the value chains end-to-end across a wide spectrum of agricultural commodities with the holistic lens of CISS-F. It is not enough that a value chain is competitive but not inclusive or it is competitive and inclusive but not sustainable. The issue of scalability is very critical to achieve macro gains in terms of greater farmer outreach and sectoral growth. The research undertaken here brings out some very useful insights for policymaking in terms of what needs to be done better to steer the agricultural value chains towards being more competitive, inclusive, sustainable and scalable. The value chain specific research findings help draw very nuanced policy recommendations as well as present a big picture of the future direction of policy making in agriculture