Preparing for Thin Cows - Oxfam International

context and can contribute to rapid economic growth, while at the same timepromoting the development of the domestic market. From 1975 to 1985,public procurements never exceeded 12 per cent of total production and 15per cent of consumption (10 per cent in normal years), 39 while the ceilingprice for consumers was maintained around the international price level.Consequently, the efficiency of the private marketing structure was alwayscrucial for Indonesia. The price band was set in order not to discourageprivate trade. The margins were primarily determined with reference to thestorage and distribution costs incurred by the private sector. The band wasprogressively widened 40 once the country had reached self-sufficiency. Atthis time, Indonesia also lowered its stocks to give more flexibility to thesystem, and was even more effective at stabilising domestic prices. 41In order to achieve this, BULOG invested significantly in leadership and stafftraining, allowing regular updates of the rice floor and ceiling prices, as wellas the size of buffer stocks needed, or the amount of fertiliser subsidies.Integration into macro-economic policy making and access to financialresources were also vital to the agency’s success in stabilising domesticprices.After the Asian financial crisis of 1997, Indonesia’s economic growth wasdrastically curtailed and it had to call in the International Monetary Fund(IMF) to avoid economic collapse. In return, the IMF subjected thegovernment to severe pressure to scale down BULOG activities and limitpublic interventions in the rice market. 42Using innovative instruments as part of aglobal food reserve strategyLocally owned and well-managed mechanisms can reduce people’svulnerability to natural disasters, seasonal market fluctuations, andsupply shocks, as well as the need for international food aid. As suchmechanisms are based on local producers, they also have potentiallystrong leverage on local food production and rural incomes. For manyyears, Oxfam has supported community grain banks through livelihoodprogrammes. Cereal banks and warehouse receipt systems allowdecentralised or community-based systems of food management thatare designed to protect farmers and consumers against marketfluctuations.Experiences with warehouse receipt systems have proved that they canbe strong instruments in promoting farmers’ storage capacity. In severalEast African countries, such systems have enabled farmers to obtaingreater benefit from marketing activities, while also acting as a valuablesource of credit in rural areas, which tend to be neglected by the formalbanking sector.9