A Simulation Model for Evaluating Worldwide Buffer Stocks of Wheat

Stochastic simulation is advocated for quantifying the impact of alternative buffer stock levels and storage policies on stabilizing world wheat supplies and for estimating the corresponding benefits and losses to the world economy, to the storage operation itself, to consumers, and to producers. Illustrative runs of the model show that stock levels which are optimal in terms of direct costs and benefits are likely to be too low to afford satisfactory levels of stabilization. However, buffer stock programs operated with insurance‐oriented storage rules could provide satisfactory protection against extreme shortfalls in grain supplies at a reasonably low cost.