Why Buffer Stock is Created by the Government?

The Government maintains buffer stocks for various purposes. This includes distributing food grains at a subsidized cost, lower than market prices, to underprivileged sections of society and regions facing food shortages. The buffer stock is particularly crucial during natural disasters, ensuring food supply in challenging times. This system involves buying and storing surplus produce during bountiful harvests to prevent price drops and releasing stocks during poor harvests to avoid price spikes. The government procures excess crops from farmers at the Minimum Support Price (MSP) to guarantee price stability and to prepare for emergencies like crop failures or natural calamities. The Food Corporation of India implements this buffer stock policy to support the Public Distribution System and other welfare schemes and to stabilize market prices. Additionally, the government has set up a buffer stock of 1.5 lakh metric tons of pulses to manage price volatility. Excess stocks beyond base norms are considered surplus and can be utilized for exports, open market sales, or additional allocations to states.

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