ROME -- The Philippines has proposed the immediate creation of a global grains reserve or stockpile to protect both importing and exporting countries from sharply fluctuating prices.

Speaking before the world food summit hosted by the Food and Agriculture Organization (FAO) here, Agriculture Secretary Arthur Yap said the stockpile could be managed by an appropriate United Nations agency like the World Food Program, which has a track record in administering food reserves.

Under the Philippine proposal, participation in the grains reserve will be on a voluntary basis with actual food stocks warehoused in countries and regions projected to experience food shortfalls for immediate access in times of need.

As a stabilizing mechanism to moderate unusual price fluctuations, the grains reserve would operate and defend a price band.

This will protect grains producers when prices go below the low end of the band. At that point, exporting countries can sell or deposit their inventories to the grains reserve at the low end of the price band, preventing the release of more stocks into the market that can further crash prices against farmers.

When prices breach the high end of the band, the grains reserve would sell or lend stocks to importing countries which would like to avoid having to buy food at higher than normal market prices. The infusion of supplies is expected to moderate, if not stop, further increases in food prices.

Yap said exporting countries should also be allowed by multilateral financing institutions to borrow funds against their stocks kept in the global grains reserve.

“This is an effort to ensure that by protecting the profitability of food producers, they will continue to produce food, while the world’s poor and hungry will be sheltered from the harm of harsh speculative commodity prices,” Yap said.

Yap suggested in the Philippine statement delivered at the food summit that rice be first on the list of the proposed global reserve inventories because it is the staple consumed by nearly three billion people.

The proposed reserve could be expanded later to include other staples such as wheat and corn, he said.

In arguing the Philippine position, Yap pointed out that among the world’s traded staples, rice should be the first commodity to be covered by a global stockpile because it has been the most prone lately to sharp price fluctuations as a result of “a very thin market” -- only 5 to 7 percent of total production of this grain is traded worldwide.

He said current rice prices have jumped 68 percent from year-ago levels. Since January this year, rice prices have soared 53 percent.

Emphasizing the urgency of the Philippine proposal, Yap said: “Whatever the resolution will be at the conclusion of this conference, let us be reminded that the world’s vulnerable are not interested to hear more of our words, but are actually begging for our action, now. We confront a new order and no solution is simple, yet if the objective is to stabilize price and supply to protect the world’s poor and hungry, we must persist no matter how seemingly difficult the path may be.”