Question

what is the meaning of buffer stock and its function

Answer 1

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).

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Answer 2

Buffer Stock-A buffer stock scheme is an attempt to use commodity storage for the purposes of stabilising prices in an entire economy or an individual (commodity) market. Specifically, commodities are bought when a surplus exists in the economy, stored, and are then sold from these stores when economic shortages in the economy occur.

Function of Buffer Stock-

1. meeting the prescribed minimum buffer stock norms for food security,

2. monthly release of food grains for supply through Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS),

3. meeting emergency situations arising out of unexpected crop failure, natural disasters, etc., and

4. price stabilisation or market intervention to augment supply so as to help moderate the open market prices.

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