On the role of government in food staples markets : perspectives from recent research and implications for Mozambique

The purpose of the brief is to draw lessons for Mozambique as it decides how to use the grain storage silos it has been building since 2009. The authors suggest that: (1) Mozambique is in an unusually strong position to take advantage of private sector activity to stabilize prices over time and space; (2) additional investment in road and rail infrastructure, incentives, and institutions, would help bring down transaction costs and allow private action to further stabilize prices; (3) additional stabilization, for those times when Mozambique has to rely on imports from the world market beyond what they normally make, could be obtained in a cost efficient manner using a financial reserve; and (4) if the government chooses also to maintain a public physical reserve, then several conditions (listed in the brief) are necessary for operating this in a manner that improves market performance. (Author abstract, modified)