Question

Why buffer stock is created by the government?

Answer 1

• The stock of foodgrains acquired through the Food Corporation of India (FCI) by the Government is known as buffer stock. Mainly rice and wheat are procured.
• Granaries are used to store the food grains that are purchased.
• Government uses this buffer stock to distribute the food grains to poorer sections of the society at lower than the market price which is also known as the issue price.
• Buffer stocks help in solving the problem of food shortage during calamity and when weather conditions are adverse.
• To give incentives to the farmers to raise crop production, the Government declares the Minimum Support Price (MSP) before the beginning of the sowing season.
• When the FCI purchases the foodgrains from the farmers with surplus production, they are paid a pre announced price.
• Minimum Support Price (MSP) is the term used to describe the pre announced price that is paid to the farmers.