Tashkent, Uzbekistan (UzDaily.com) -- In the face of changing climate conditions and the occurrence of natural disasters, as well as other challenges, the stability and security of food supplies are becoming increasingly important. One of the main factors in ensuring food security is the creation of reserves and maintaining the price and quality of basic food products.

The stability and reliability of food stocks play a decisive role in ensuring that the population has enough food in case of crisis situations. The creation of food reserves allows the state to have stocks of food to quickly respond to unexpected circumstances, such as a lack of production due to poor harvests or other extreme events.

The state food reserve (SFR) means the purchase, storage and supply of food to the population by the state with the help of state companies and organizations. In many countries, the reserve is an important component of agricultural policy. Typically, the reserve includes products that are most popular in the country and make up the majority of the national diet.

As a rule, grain is predominantly the main product used in the formation of food stocks. The state of the grain market largely affects food security not only on a regional but also on a global scale.

Many developed countries, including the USA, China, members of the European Union and others form stocks of grain and food. However, product reservation standards vary. In some countries, such as Switzerland and the United States, stockpiles of food are built up to ensure sufficient food distribution over a five-year period.

Information about the volume and composition of state reserves is strictly protected in all countries. The information available in public sources may be either incomplete or completely absent. When listing items to reserve, a variety of factors are taken into account, including storage costs, processing time and complexity, and many other factors.

The creation of food stocks is regulated by legislation aimed at ensuring national food security. In this regard, specialized organizations have been established in each country to manage food reserves. For example, in India, this issue is dealt with by the Food Corporation of India, in China - by the State Administration of Food and Material Resources under the National Development and Reform Commission of the PRC, in Russia - by the Federal Agency for State Reserves, in Kazakhstan - by NC Food Corporation JSC, in Moldova - Agency of Material Reserves (AMR) under the Ministry of Internal Affairs.

In Kazakhstan, food reserves are centrally formed, including soft and durum wheat, barley, oats, buckwheat, rye, millet, corn, lentils, peas, chickpeas, sunflower, rapeseed and other crops. The implementation of this process is entrusted to NC Food Corporation JSC through forward purchases with prepayment, as well as upon delivery. The formation and sale of state reserves are carried out through the purchase, storage, renewal and use of grain reserves, intervention operations if necessary, the formation of export lots and the stabilization of grain exports to the foreign market.

When making decisions on the formation and distribution of centralized funds, the Corporation focuses on the analysis of supply and demand in the domestic and world food markets. Financing is carried out at the expense of own and borrowed funds of JSC “NC “Food Corporation”. In order to ensure the food security of the state and achieve a level of profitability in the production and sale of agricultural products, the Corporation establishes guaranteed purchase prices in agreement with the Government and the Ministry of Agriculture of Kazakhstan.

In Kazakhstan, regional stabilization funds are also being formed, which perform a number of tasks related to ensuring food security at the level of regions, cities of republican significance, the capital, as well as creating conditions for the effective and timely application of price stabilization mechanisms. The formation and distribution of these funds are carried out by the Commission for ensuring the implementation of price stabilization mechanisms for socially significant food products through procurement and commodity interventions. It consists of representatives of local governments, business entities, public organizations and other stakeholders. The Commission makes decisions on the implementation of price stabilization mechanisms in the relevant administrative-territorial unit, determines the list of goods purchased for the regional stabilization fund, the amount of the marginal trade margin for these goods, and also determines business entities for providing loans in accordance with the rules for implementing price stabilization mechanisms for socially important food products. In addition, the Commission determines a specialized organization, which is subsequently approved by a decree of the Government of the Republic of Kazakhstan, and performs other functions in this area.

On an ongoing basis, a specialized organization analyzes the volume of food products in the internal markets of the region and the markets of agricultural products. When deciding whether to conduct procurement and commodity interventions, the Commission relies on the results of an analysis of various indicators, such as production volumes, availability of goods at the regional level, trade dynamics, stock levels, price dynamics and other factors provided by a specialized organization. For example, the stabilization fund of the West Kazakhstan region in the period from 2020 to 2021 included 11 types of products, such as flour, bread, pasta, rice, sugar, sunflower oil, buckwheat, beef, chicken, salt and eggs.

The State Material Reserves Fund under the Ministry of Emergency Situations in Kyrgyzstan is engaged in state purchases of food grain wheat in order to ensure food security and regulate the market during periods of rising prices. Orders on a contractual basis are placed at enterprises, regardless of their departmental affiliation and form of ownership. In addition, procurement and commodity interventions in the market of agricultural products, raw materials and food are envisaged in Kyrgyzstan in order to ensure food security and support national producers in accordance with the law.

In Russia, state material reserves are formed at several levels - federal, regional, local and departmental. At the federal level, the Federal Reserve operates, which creates mobilization reserves and reserves to stabilize the economy in the event of temporary disruptions in the supply of important resources, the provision of humanitarian assistance and market regulation.

Before the beginning of the year, the government and executive bodies of the constituent entities of the Russian Federation set quotas for producers and suppliers of agricultural products, raw materials and food for state needs. Financing is carried out from the budgetary funds of federal and regional funds. The list of goods included in the order for federal and regional government needs includes grain, sugar beets, oilseeds, fiber flax, livestock and poultry, milk and dairy products, and wool.

Since 2013, intervention purchases have been actively used in the European Union as a tool to overcome serious price fluctuations in the world market. Intervention funds are formed when the price of a certain product in foreign markets falls below the level of the intervention price for a certain period of time.

The food security of the European Union is also ensured through the use of the integration fund, which is aimed at supporting and developing the agro-complex. A significant part of the funds of this fund is allocated for the following purposes:

Subsidizing the export of agricultural products;

Maintaining established uniform prices, which were introduced back in 1962;

Stabilization of the market for dairy products, grain and sugar.

Thus, these measures are aimed at ensuring the stability and reliability of the food market, as well as supporting the agricultural sector in the European Union.

In Moldova, the state reserve is managed by the Agency of Material Reserves under the Ministry of Internal Affairs. The agency practices the following model for purchasing wheat for the state reserve: the department announces a tender for the purchase of state reserve, indicating the purchase price and supply volumes, as well as payment terms from the moment of delivery. At the same time, the Agency of Material Reserves can also enter into direct negotiations with agricultural producers for the purchase of wheat, which is permitted by law, and the price must be set through direct negotiations and depending on market prices, as well as taking into account the situation on the local market.

Thus, based on foreign experience, the following conclusion can be drawn that in the state reserve it is important to form stocks of both final consumer products and raw materials. The types of raw materials and food for the reserve are determined based on many factors, including the cost of storing the raw materials themselves and the products of their processing, as well as the duration and complexity of the technological path from raw materials to consumer products. 

The main tasks to be solved in the course of public procurement to the state reserve include ensuring food security, balancing supply and demand in the food market, and providing state support to agricultural producers. Government purchases are also an effective tool for indirect regulation of prices for socially important products.