Description

Where the state organises and finances public storage facilities, farmers and agricultural dealers supply products that meet certain quality standards to state intervention agencies. These agencies commit to buying the products at a pre-set price during a certain period of time. Intervention stocks can be sold through public invitations to tender.

In order to meet what is sometimes a statutory duty to provide public storage, the state intervention agency usually enters into framework agreements with private warehouses. Regular inspections are performed during the storage period to guarantee the quality of the goods.

Strategic storage has been used as an instrument for controlling prices in the past, both at national and regional levels (e.g. ASEAN, EU), and is now increasingly being revisited in the international debate.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• State intervention agency to buy the products
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Close cooperation and knowledge sharing with farmers' organisations
• Compatible regional and world trade law (WTO conformity)
• Constant market surveying and forecasting
• Quality management systems
• Regulated and legally protected payment structures
• Regional and / or national regulations on storage conditions
• Skilled / specialised personnel to man the respective institutions / provide the respective services
• Logistics and storage facilities

Possible Negative Effects

• Inefficient market processes / market distortion
• Spoilage / loss of goods
• Uncertainties caused by low stock levels push up prices
• Surplus in the market when stocks are taken out of storage