What is Buffer stock?

4.7 What is Buffer stock?

Description

Quick Overview

Buffer stock refers to the stock of foodgrains, mainly wheat and rice, procured by the government to ensure food availability during shortages.

Standard

Buffer stock is created by the government through the Food Corporation of India, which purchases surplus foodgrains from farmers at a pre-announced Minimum Support Price (MSP). This stock is utilized to stabilize food supplies, especially in deficit areas and during adverse conditions, by distributing these grains at a lower price than market rates.

Detailed

Buffer Stock

Buffer stock is a strategic reserve of foodgrains managed by the government, specifically comprising wheat and rice, procured through the Food Corporation of India (FCI). The FCI establishes a minimum support price (MSP) for these crops, which incentivizes farmers to increase production. The government announces the MSP annually before the sowing season, ensuring that farmers receive a fair compensation. Once procured, these grains are stored in granaries and serve several purposes:

  1. Distribution in Deficit Areas: The buffer stock is crucial for supplying foodgrains to regions facing shortages or to the economically disadvantaged sections of society.
  2. Price Stabilization: By issuing these grains at an Issue Price lower than the prevailing market prices, the government aids in stabilizing food costs for consumers.
  3. Crisis Mitigation: During adverse weather conditions or natural calamities, buffer stock plays a critical role in addressing food shortages, ensuring food security for the population.

In summary, buffer stock is an essential mechanism for the government to ensure food security and price stability across various regions.

Key Concepts

  • Buffer Stock: A government-maintained reserve of foodgrains for stability.

  • Food Corporation of India (FCI): The agency responsible for procurement.

  • Minimum Support Price (MSP): Price offered to farmers for their crops.

  • Issue Price: Price at which government distributes food to the needy.

Memory Aids

🎵 Rhymes Time

  • If crops are grown, and the weather’s fine, buffer stock helps us dine on grain, on time.

📖 Fascinating Stories

  • Imagine a farmer named Raj who grows more wheat every year. The government promises him a fair price ahead of the season, ensuring he can feed his family and contribute to buffer stock. When drought hits, Raj's grains help his community stay fed.

🧠 Other Memory Gems

  • Buffer stock can be remembered as B.U.F.F.E.R: Backup for Unpredictable Food For Everyone's Relief.

🎯 Super Acronyms

Think of MSP as 'Minimum Support for Producers' to remind you why it exists.

Examples

  • In a year with good rainfall, the FCI buys excess grains from farmers and stores them as buffer stock.

  • During a drought, the government sells buffer stock at an issue price to help those affected by food shortages.

Glossary of Terms

  • Term: Buffer Stock

    Definition:

    A reserve of foodgrains maintained by the government to ensure food security and stabilize prices.

  • Term: Food Corporation of India (FCI)

    Definition:

    An agency of the Government of India responsible for the procurement and distribution of food grains.

  • Term: Minimum Support Price (MSP)

    Definition:

    A pre-announced price at which the government purchases crops from farmers to support their income.

  • Term: Issue Price

    Definition:

    The price at which the government distributes food grains to the public, typically lower than market rates.