Dwindling Food Reserves Are a National Security Risk

Policymakers have allowed the critical national security tool of food reserves to rust
December 12th 2022

This op-ed is drawn from Adin’s white paper, “Food Reserves, Global Food Security, and International Stability.”

U.S. policymakers have allowed a critical national security tool, that of food reserves, to rust. In doing so, they’ve ceded power over our food costs to China. 

Since 1990, global dependence on food imports has skyrocketed. As a result, China’s large crop reserves now exert massive influence on worldwide markets and food supplies. Meanwhile, the U.S. share of global crop reserves has declined from 40% in the 1980s to 5% today. Although crop reserves serve a humanitarian purpose, they’re also a critical national security tool for projecting soft power and protecting Americans from price shocks. Today, they’ve dwindled precipitously. We now buy our humanitarian food aid on the open market, driving up prices precisely when markets are most strained.

China has taken full advantage, building up massive reserves and driving up food prices for Americans. In past responses to low global food reserves, China opened its reserves to the global market, keeping prices down. But during pandemic-induced shocks, China has not released stocks, despite holding majorities of the world’s corn, rice, and wheat. Instead, it has continued its program to build up reserves, keeping global food prices high. At a time of its choosing, it could dump stocks on the open market, cratering American farm revenue without warning. 

The U.S. could decrease our food price vulnerability to adversarial supply disruptions by pushing to lift trade restrictions on public food reserves. 

While the U.S. led the world in humanitarian food assistance during the twentieth century, the cost-cutting consensus of the 1990s pushed developed countries to reduce reserves. Following the 2007 food crisis, the U.S. depleted its last humanitarian reserves. Despite producing nearly a sixth of the world’s staple crops, the U.S. finds itself caught unprepared to provide robust food assistance. Public reserves would allow the U.S. to provide quicker, more effective aid in circumstances where supplies are low. 

Beyond serving a direct humanitarian purpose, food assistance remains an incredibly powerful tool for supporting American allies, and shaping overseas perceptions of the U.S. The mandate that food packaging bear the label “by the people of the United States of America” highlights how considerations of national interest have shaped U.S. food aid policy.

Most immediately, food reserves enable countries to absorb supply disruptions from losses in production or trade, stabilizing prices. Countries with larger reserves were better able to weather the price spikes of the mid-2000s. Reserves can also encourage investment in production by providing an additional market for farmers when prices are low. 

American food policy is constrained by the WTO Agreement on Agriculture (AoA), which has pushed developed countries to reduce reserves, while Chinese reserves have soared.  The WTO has reason to be wary of reserves: in the past, some food stockpiles have been built up to excessive levels, mismanaged, or abruptly dumped in the market. But WTO and domestic policy has overcorrected, making consumers increasingly vulnerable to supply disruptions. Well-designed reserve policies can avoid these pitfalls while providing security to producers against negative price shocks. 

Nations in the G33 claim the AoA limits their ability to prepare for future crises. WTO negotiations have been stalemated for a decade over whether to allow AoA signatories to develop greater food reserves. The U.S. should endorse reasonable amendments to the AoA that would allow signatories to invest in public stockholding programs. The AoA should exempt purchases of food for reserves at administered prices if these prices are available for both domestic and international producers. 

American food reserves can insulate vulnerable consumers from supply shocks and price spikes. A policy of filling reserves when crop prices are low gives farmers the confidence needed to invest, and ties support for producers to active production, as opposed to our current policy of cash handouts. 

The first stockpiling program in the U.S. was termed the Ever Normal Granary, in an homage to dynastic Chinese tradition. In an ironic turn, modernized stockpiling programs may prove a hedge against Chinese food price manipulation today.