The histories of storage in Australia and India summarized above show that storage policies because of their ability to temporarily raise prices are highly susceptible to being captured by farm lobbies. But other experiences of storage policies such as the European ones that resulted in butter mountains and a wine lake could tell the same story. This political economy issue was illustrated by the fact that these domestic storage policies lacked clear rules and may even have pursued multiple and contradictory objectives. The confusion was between preventing low prices and reducing price volatility. The former objective was always seriously defended but the lack of precise selling prices made the latter less achievable. The failures of the wool and tin stabilization programs demonstrate also that, when these programs are poorly designed, one of their most important market effects may be their collapse, since the stocks accumulated under explosive intervention rules can depress the market for a long time. These limitations might suggest that better outcomes would be achieved through more rules-based storage policies, delegated perhaps to independent organizations.

The story of ICAs, which relied on clear rules and were delegated, proves this intuition wrong. From his study of ICAs, Gilbert (1996; 2011) does not conclude that price stabilization policies are infeasible and bound to break down, but that they involve problems likely to threaten their long-run stability. These problems revolve around the issue of reference price and bandwidth updating, which is both conceptually complex and politically challenging since it reveals the inherent conflict between producing and consuming countries over schemes that have obvious large costs but unclear benefits. In addition, where such schemes proved effective this was more in relation to preventing low prices than stabilizing prices.

# **4.3 The apparent effectiveness of trade policies**

In the past buffer-stock policies were quite widespread. The end of ICAs, successive reductions in Europe of direct market support, and structural adjustments in many developing countries have resulted in these policies being used much less since the early 1990s. Many countries continue to maintain stocks for emergencies or food-based safety nets but less so to achieve stabilization. This does not apply to countercyclical trade policies which are widespread. In the countries surveyed by Demeke, Pangrazio, and Maetz (2009), trade policy adjustments, whether tariff reductions or export restrictions, were the most commonly adopted policy measures during the 2007/08 food crisis (in 68 out of 81 countries). Their use is not restricted to crisis situations. Anderson and Nelgen (2012a) analyze a panel of 75 countries that account for 90% of global agriculture and show that these adjustements occur equally at low and high prices, in importing and exporting countries, and in developing and high-income countries.

Unlike storage policies, which occasionally have been procyclical, trade policies are fairly consistently countercyclical. Tariffs increase when the world price is low and decrease when it is high. Exporting countries tend to restrict exports during price spikes and to promote them 29