Socioeconomic benefits of emergency storage of food grains

On behalf of the Norwegian Agriculture Agency, we have investigated the socio-economic benefits of emergency storage of food grains. We look at the probability and consequences of situations where the supply of food grains globally has weakened, resulting in rapidly higher prices.

The usefulness of a Norwegian grain warehouse is mainly related to a possible sense of security and societal stability as well as contributing to delivery and price stability. Normally, one will be able to hedge against price fluctuations through various financial instruments, without having a separate physical inventory for the item.

Household expenditure related to grain accounts for only a small share of the total expenditure (and also a small share of food expenditure). A tenfold increase in the grain price will increase the household's monthly expenses (without adjustments) to NOK 1500. This is a considerable amount, but still far less than what the electricity price crisis in the winter of 2021/22 would have provided without electricity support. However, a warehouse that protects consumers from high prices will also curb consumer adaptation, thus countering well-functioning market systems.

If a Norwegian grain warehouse is to be established, we recommend based on analyses of the probabilities of different lengths and scopes of supply crises, a warehouse equivalent to 3-6 months of consumption. The exact size of the inventory must be determined based on the cost.

The full report is available here: report 2022/14 Read the Agriculture Directorate's report here:

The full report is available her (in norwegian), and the report from the Norwegian Agriculture Agency is available here.