What is the main purpose of buffer stock scheme?
A buffer stock scheme (commonly implemented as intervention storage, the “ever-normal granary”) is an attempt to use commodity storage for the purposes of stabilising prices in an entire economy or an individual (commodity) market.
How does buffer stock scheme work?
A buffer stock is a system or scheme which buys and stores stocks at times of good harvests to prevent prices falling below a target range (or price level), and releases stocks during bad harvests to prevent prices rising above a target range (or price level).
What are the advantage of keeping the buffer stock?
Advantages of buffer stocks Stable prices help maintain farmers incomes. A rapid drop in prices can make farmers go out of business, which leads to structural unemployment. Price stability encourages more investment in agriculture. Farming can have positive externalities e.g. helps rural communities.
What are benefits and drawbacks of buffer stock?
Advantages and Disadvantages of Buffer Stocks
- Price Stability. One of the key benefits of buffer stocks is market stabilisation.
- Subsidies. Buffer stocks serve as a form of government subsidy for farmers.
- Production.
- Artificial Inflation.
- Waste.
What is the main purpose of buffer stock in India?
Notes: The Buffer stock was introduced in India as a reserve of a commodity that can be used to offset price fluctuations. The price stability is the main aim of the buffer stock as that will impact the whole market and the economy.
What is buffer stock in simple words?
: a stock of a basic commodity (such as tin) acquired (as by a cartel) in a period of low or unstable prices and distributed in a period of high prices to stabilize the market.
What are the issues of buffer stock?
Dual Wastage: Huge quantities of food stocks get spoiled due to unscientific storage methods and at the same time a large percentage of the population is dying of hunger in India. Warehousing Issues: Lack of sufficient storage space and other storage infrastructure after the procurement.
What is the limitations of buffer stock?
A series of good harvest could put too much pressure on the agency that has to keep buying additional stock. Stock may be perishable, so agencies lose money by having to destroy their stock. A series of poor harvests may lead to the agency running out of stock.
What is buffer stock example?
Buffer stock system can be learned as a government scheme that is used for the purpose of stabilizing prices in a volatile market. Genesis wheat stores, ever-normal granary, EU cap, International cocoa Organization (ICCO), and 1970 wool floor price scheme Australia are few examples of a buffer stock scheme.
What is buffer stock class 9 short answer?
Buffer stock is the stock of foodgrains namely wheat and rice that is procured by the government through the Food Corporation of India (FCI) from states where there is surplus production at a pre announced price.
How is buffer stock maintained by the government?
Buffer stock of food grains in the Central Pool is maintained by the Government of India (GOI) / Central Government for meeting the prescribed minimum buffer stock norms for food security, monthly release of food grains for supply through Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS).
What is buffer stocks and food security?
Buffer stocks refer to a pool of certain commodities like Rice, Wheat, etc which are maintained to provide food security and tackle unforeseen emergencies like drought, famine, wars, etc. Stocking of Food Grains was first introduced in India in 1969 during the 4th Five year plan period.