explain the problem associated with high level of buffer stock and food grain procurement at enhanced MSP
Answers
Issues of buffer stocks and food security
Issues of buffer stocks and food security
In present scenario, there is major problem in staple food distribution system due to the price volatility of commodity. The shortage of staple food around the world has adversely impacted on the economics, political and social crisis because of food security reason.
Public sector food grain stocks are significant support of India’s food policy and food security. They have three important societal goals.
To provide space for effective implementation of minimum support price for rice and wheat through procurement mechanism.To maintain price stability arising out of year to year fluctuations in output or any other exigency.As a source of supply for public distribution system and various other schemes to sustain food and nutrition security particularly of economically weaker sections.
The Food Corporation of India is the key agency for procurement, storage and distribution of food grains. In addition to the requirements of wheat and rice under the targeted public distribution system, the Central Pool is essential to have sufficient stocks of these in order to meet any emergencies such as drought/failures of crop, as well as to allow open market intervention if price increases (Ratna Kumari Bandila, 1992).
Buffering is a means by which an organization attempts to ensure that it has safe level of stocks in addition to its base stock. Maintaining a buffer stock is an important constituent of the Government’s food policy. The buffer stock gives the basic and most flexible instrument for moderating short-term effects of supply or production shortfalls. The concept of a buffer stock was first familiarized during the 4th Five Year Plan (1969-74) and a buffer stock of 5 million tonnes of food grains was envisaged. The way, in which many businesses approach to the concept of buffering, it reflects the operation management has developed over the past decades. In past business believed that it was unable to deal with fluctuation which occurred external to the organization. Physical buffering had to be in place to ensure that demand could be satisfied. This was the standard price regardless of the fact that the businesses might be able to increase its output to cope with an increasing demand (Jonathan Sutherland, 2015).