Towards an Initial Crop Portfolio in Food-Insecure Arab Micro-States with Embryonic Agriculture: A Constrained Optimization Approach
57 Pages Posted: 11 Jul 2014
Date Written: July 10, 2014
Recent periods of high and volatile food prices have prompted several import-dependent Arab micro-states to consider at least some domestic production, among other proposals, as a way of mitigating extremely volatile food prices, which even in rich micro-states can have adverse health and economic effects and probably represent the most serious manifestation of food insecurity to such countries. Using Qatar as a case study, which is almost entirely import-dependent and faces exceptionally volatile food prices, we employ non-linear mathematical programing and analogs to measures of volatility in the financial sector to develop a model to guide the constitution of a crop portfolio for the inaugural year for domestic production, supplemented by storage, which is optimal in the sense of achieving the most dampening effect on price volatility. We conclude that the desired result cannot be achieved for grains through domestic production and that strategic storage must play a crucial role. However, a meaningful target for volatility reduction, well short of self-sufficiency, can be achieved for all other raw products through an obtainable level of domestic production.
Keywords: Food price volatility, Strategic storage, Domestic production, Market concentration, Non-linear programming, Arab micro-states
JEL Classification: C60, L40, Q18
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