Should countries build stockpiles of essential supplies?
The coronavirus has led to a sharp spike in the demand for basic supplies. But the principle of stockpiling goods is not new.
“You would buy toilet roll if it was available, which wasn't often.” No, that’s not a quote from someone in the future telling the story of the Covid-19 pandemic. It’s my Dad’s words as he recalls living in Poland under communism in the late 1970s. He remembers how some entrepreneurial folk used to sell spare rolls in the street.
“You would ask, 'Where did you get it?',” he adds, emphasising the urgency of the question. He’s been reminded of it all lately right here in the UK, having seen droves of people carrying large packets of loo roll home from the shops.
Toilet paper shortages became a cliché of life in the Soviet Bloc. For some, they were symbolic of everything that could go wrong in such a system. A target of mockery, even.
But in robustly capitalist economies today, many of us have experienced the sight of supermarket shelves devoid of loo roll for the first time thanks to a massive spike in demand during the current pandemic.
Despite assurances earlier in the month, British shops still seem bedevilled by an intermittent supply. Other countries have faced similar problems, which is why Prof Justin Wolfers at the University of Michigan suggested the US establish a “government-backed Strategic Toilet Paper Reserve” that could dole out rolls in a crisis.
The principle of stockpiling important goods is not new. The US already has an underground store of more than 700 million barrels of oil – the Strategic Petroleum Reserve (SPR). And the Bill Emerson Humanitarian Trust, also in the US, is designed to hold up to four million metric tons of wheat and other emergency supplies. 700,000 metric tons were released from the reserve in 2005 for Ethiopia, Eritrea and Sudan.
Should countries stockpile bog roll, though? And what about other essentials – water, common food items, hygiene products and even pasta?
There are those who think that some degree of stockpiling would help societies prepare for future unforeseen peaks in demand. To take one example, the city of Henderson in Nevada, part of the Las Vegas metropolitan area, has been no stranger to the toilet roll rush. Many of the town’s 300,000 people have flocked to supermarkets to stock up on supplies – including toilet roll – explains Ryan Turner, division chief of emergency management and safety.
The city has tried to increase supply chain capacity by waiving rules around the number of hours that truck drivers can drive for and allowing deliveries to be made 24/7 rather than only during daylight.
“We’re kind of on an island,” he says. “Not in the ocean, it’s in the desert. We don’t grow anything, we don’t have farms or that kind of thing.”
That’s why, for years, residents of Henderson have been advised to keep a three-day stockpile of supplies at home, just in case they need to rely on them, as shown in this video:
“On behalf of all emergency managers across the United States, we would love to see this in our nation and we would love to see this worldwide,” says Turner, who sits on the US government affairs committee of the International Association of Emergency Managers.
Although the three-day supply scheme didn’t prevent high levels of demand at local shops, it did mean that some families were insulated against shortages for a few days.
This approach places the stockpiling requirement on individuals, which to some might seem unfair. Not all families will be able to afford to keep a store of supplies. But on the other hand, large, centrally managed stockpiles have their downsides, too, says Turner.
There are sizeable inventories of personal protective equipment (PPE) for healthcare workers in Nevada and around the US. Civic managers in Henderson were hoping to receive lots of this equipment once the nature of the pandemic became clear.
“We’ve gotten a much smaller amount from the government than we were anticipating,” notes Turner.
A local business in Henderson that usually makes blinds has now switched production and is churning out surgical gowns and masks instead.
Anyone in charge of a major central stockpile may find it hard to know when to release stock and to whom, says Laura Wellesley, a research fellow at Chatham House.
And simply building up stores of essentials can cause alarm when done at scale.
“If one country starts to stockpile, other countries get spooked,” she explains. “That may disrupt the global food system even more.”
A supermarket scramble – but on a macro scale.
Some have already noticed how certain countries are restricting exports of particular items. Kazakhstan is temporarily prohibiting the export of wheat flour, for instance. And in recent days the UK has restricted exports of a raft of medicines – including paracetamol, insulin and morphine.
These measures are to ensure a stable domestic supply but it is not yet known what the knock-on effects of such decisions, on a global scale, might be.
Wellesley points out that, historically, stockpiles like the US SPR have largely been intended as a means of controlling prices. You can release inventory at a time when prices are high, for example, to reduce pressure on the market.
Instead of relying on such facilities to help us during a time of need, it might be better to think about making the whole supply system more resilient, she suggests.
That could entail a mix of localised stockpiling by businesses, increased domestic food production and greater redundancy in the existing systems that bring products in from abroad. It would be risky to rely entirely on local production, though. What if a disaster hits the whole nation but neighbouring countries are left relatively unscathed?
“We need trade and we probably do need some form of stocks on which to draw in a real emergency,” says Wellesley. “None of these things is going to be enough on its own.”
Coincidentally, the resilience of supply chains has been much discussed of late – thanks to Brexit. Could the UK, for example, feed itself? Analysis suggests the answer is a resounding “not as we are used to”. We import half of our fruit and vegetables, for instance, and a fifth of our beef.
Adjustments to this could protect the UK from future supply shocks, which Wesllesley thinks could become all the more common thanks to climate change and other global challenges.
Although the idea of massive warehouses scattered around the country, with enough supplies to keep us all going for a few days or weeks seems comforting – particularly at a time like this – perhaps the “stockpile” should be a distributed one. If we “stockpiled” in the form of additional capacity both in terms of domestic production and supply chain redundancy, we might be far better insulated from spikes in demand in the future. And, like in Henderson, families and individuals who store a few practical essentials ahead of time might also feel protected should a crisis suddenly unfold.
Like any change to the system, introducing such a scheme would cost money and resources. Up until very recently, many would have argued this approach was unnecessary. Fewer will surely be making that argument now.
Get our weekly email