Grain imports and food security in an unstable international market

The paper explores a decision theoretic approach to deriving excess demand functions for grain for food deficit foreign-exchange constrained developing countries. The form of excess demand functions derived is consistent with empirically observed ones. Different strategies to improve on the country's food security are investigated using the expected value of a criterion incorporating foreign exchange and the cost of not satisfying domestic requirements. The results indicate that, besides a drive toward self-sufficiency, by reducing variability of grain requirements with the help, for example, of domestic buffer stocks and by improving the domestic crop information system, a country can go a long way toward improving its international food security position.