The subject of food stocks has been studied at length. A recent review of South Asian food stock system is available in Dorosh (2008b). The key questions that have emerged from the experience of South Asia and elsewhere include: multiplicity of objectives; efficiency of public distribution versus markets; corruption and wastage; role of trade; and fiscal costs. India’s experience best illustrates these various issues and the challenges of trying to reconcile them. Historically, the growing cost of production has forced the government to accumulate a huge stock of rice and wheat at increasing prices. In particular, wheat prices until 2006 were higher in India than internationally owing to the incentive policy, raising issues about efficiency of domestic supply. At the same time, the government’s objective to keep prices low for consumers led to subsidies, contributing to a growing fiscal cost of public food distribution. Concerns also emerged about losses from theft and corruption, and wastages from storages. Despite these costs of the food stocking policy, India nevertheless feels vindicated by the ability to manage the global food price crisis much better than most countries of the world based on its food stocking and public distribution policies. Thus, the Indian policy maker is able to declare: “Thank goodness we did not listen to the Washington Consensus advice of letting markets work. If we did, rice and wheat prices would have soared and impoverished millions of India’s poor people”.

Even so, there is a need to rethink the right balance between food stocks and trade. Maintaining some level of stocks to meet emergency situation and global crises such as during 2007-08 is a sound policy decision. Working out that prudent level while keeping an eye on fiscal cost, theft prevention and stock wastage is important. Participating in the global food market through trade with appropriate safeguards on domestic availability through foodstocks is a better policy option than to impose trade bans or prohibitive tariffs.

**d) Input-output pricing policies:** The complex system of pricing interventions have distorted incentives, reduced the efficiency of farm production and added to the fiscal burden.  Importantly, this has tended to divert attention away from addressing the productivity challenge.  The key to resolving South Asia’s food challenge is to raise productivity. Importantly, the recent price increases for food crops provide policy makers a golden opportunity to revisit the whole support strategy for food policy. The improved terms of trade in favor of agriculture resulting from the global commodity price boom allows South Asian governments to let farmers benefit from these higher output prices while removing the fiscally expensive and inefficient subsidies. The resources thus saved could be redirected to areas that support farm productivity including spending on rural infrastructure (roads, irrigation, rural electricity), farm technology, research and extension.  Food security concerns on the supply side are possibly best addressed by focusing on farm productivity rather than through subsidized inputs.

**e)  Safety nets:** An effective safety net system is a key aspect of tackling food security on the demand side<sup>10</sup> . The immediate response of South Asian governments to use the existing safety net programs involving public food distribution is an understandable response to the food price crisis.  However, South Asian governments are also well

10 For a useful review of the role of safety nets in poverty reduction strategies, see Ravallion 2006.

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