* Physical and virtual reserve idea tough to implement
* Logistics, costs, transparency seen among obstacles
* India says reserve should not be used for trade
By Dmitry Zhdannikov and Amie Ferris-Rotman
ST PETERSBURG, Russia, June 7 (Reuters) - Tough logistics and questionable efficiency are only a few drawbacks to creating the world food reserve proposed by the G8 as a cushion against high prices, sudden shortages and volatile production.
Many participants in this weekend's World Grain Forum in St Petersburg said the obstacles were so big that it could take years for the reserve idea to materialise and, even if it does, it will most likely take a regional rather than a global form.
"Grain reserves are overly complicated. They cost too much and, in fact, history has shown they don't work," said Michael Michener, administrator of the U.S. Department of Agriculture's foreign agricultural service.
G8 farm ministers, meeting in Italy in April, discussed the merits of buffer grain stocks as an emergency food facility and a means to curb speculative commodity trade.
"If the WFP (the United Nations' World Food Programme) wants to do it on a national basis that is fine," said Michener. "But we would simply say that a broad international, either physical or virtual, reserve is too problematic," he added.
Russia, home to almost one-tenth of the world's arable land, was showcasing its role in global food security by hosting the inaugural World Grain Forum, an idea tabled by President Dmitry Medvedev at a summit of Group of Eight leaders last July.
On Sunday, Agriculture Minister Yelena Skrynnik said Ukraine and Kazakhstan should join Moscow to improve infrastructure and create a Black Sea trade bloc with the potential of becoming the largest grain exporter in the world.
"This precedent may become the first step to forming global grain stocks and create a model of managing food reserves," Skrynnik said, adding the pool would help reduce price volatility and the market's dependence on speculative trade.
OBSTACLES TOO BIG
The idea may prove difficult even on a regional level.
"The challenge with food is that it is a sector in which there are many major controversies between governments," David Nabarro, assistant to the UN secretary general and coordinator for the global food security crisis, told a panel discussion.
"Seeking some over-arching intergovernmental governance when you have these deep controversies can create a lot of time-wasting and money-wasting activity," he said.
On Saturday, Medvedev, 40 agriculture ministers and senior officials voted for the most efficient way to guarantee food security: 32 percent voted for national reserves and 33 percent voted for international reserves.
Chris Moore, senior global public policy advisor at the UN's World Food Programme, said the appealing points of a big reserve would be assistance to areas with volatile production.
But he also said physical reserves could prove expensive and reduce private sector storage.
Other risks and challenges include stock replenishment, the timing of purchases, the optimal split between cash and physical reserves, transparency and visibility of reserves to the market and good communication between governments.
"Moreover, critics point out and quite rightly that tariffs have come down and it is easier to access certain commodities on global markets than ever before," said Moore, adding the world should study experience of countries with national reserves.
India has food stocks of 16 to 20 million tonnes and Nanda Kumar, secretary at India's Agriculture Ministry cooperation department, said it was used for supplies to the poor, with cargoes travelling sometimes as far as 3,000 km.
"But such reserves should not be used for trade," he said. (Editing by David Holmes)