Structural reforms and the need for a strategic basic food reserve in El Salvador

The continued viability of this strategic reserve as a food security mechanism for the country is examined in this report. After a brief review of the original buffer stock-market intervention program and the shift to the strategic reserve program, the report describes the latter"s policies and management in detail, covering purchasing, selling, storing, and total costs. The report then compares El Salvador"s strategic reserve program with the classical concept of a strategic reserve as practiced in other countries, and examines the need for the program in the light of current structural reforms and market development trends. Conclusions are as follows. (1) The strategic reserve program is too costly, in terms of both social and actual costs for the level of benefits (insurance coverage) provided. (2) With structural reform, national food security can be achieved through a well-informed private sector, a government that facilitates and regulates the market, and government-private sector coordination to ensure food security during catastrophe. (3) In El Salvador, where the import replacement time can be less than one month, existing on-farm and industrial stocks are more than sufficient to alleviate deficiencies caused by temporary market failure. Short- and long-term options for privatizing the reserve are presented in conclusion.