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Abstract

Despite adequate food supplies at the global level, many low-income countries experience food insecurity. Given that food deficits are projected to get even bigger in the future, the problem probably will only get worse. Added to the concern is the likelihood that global trade liberalization will increase prices and price volatility of major imported staple food commodities. Presently, the international safety nets that do exist are inadequate in stabilizing food supplies for the more vulnerable countries. Food aid has been the primary safety net, but is not sufficient to meet estimated needs around the world. The few alternatives to food aid that have been implemented so far have been either underutilized or ineffective. New safety net proposals could help stabilize grain import prices or manage import costs. This paper shows that 3 selected proposals (grain options, a revolving import compensation fund, and import insurance) would be much less costly than international food aid. The 3 programs would have cost about $300-$600 million per year, compared with the recent cost of food aid from all donors estimated at $2.9 billion. Each of the programs would be effective in stabilizing consumption variability. Improving the international safety net programs may help temper food security concerns and improve support in low-income countries for trade liberalization.

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