Buffer Stock


 
 
Concept Explanation
 

Buffer Stock

Buffer Stock: It is the stock of foodgrains (wheat and rice) procured by the government. Government purchases wheat and rice from farmers through the Food Corporation of India (FCI) states having surplus production. The farmers are paid a Minimum Support Price (MSP) for their crops. The MSP is announced at the beginning of the sowing season to give an incentive to the farmers to grow more. These purchased foodgrains are stored in granaries as a buffer stock. This stock is maintained to distribute foodgrains through the PDS in the areas of the country where production is less. It is provided, to the poorer sections of society at subsidised prices, i.e. lower than the market price which is known as the issue price. The buffer stock also helps to resolve the problem of food shortage due to a calamity or in adverse weather conditions.

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).

Food Corporation of India (FCI): This was set-up under the Food Corporation’s Act 1964, in order to support operations for safeguarding the farmers, distribution of foodgrains throughout the country for PDS and maintaining satisfactory level of operational and buffer stocks. Minimum Support Price (MSP) This is the price at which the government (through the Food Corporation of India) purchases crops from the farmers. Presently, there are 27 crops being purchased with such prices including varieties of cereals, pulses, oilseeds, fibre crops and others.

Sample Questions
(More Questions for each concept available in Login)
Question : 1

The minimum support price is decided by ____________________

Right Option : D
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Explanation
Question : 2

Consider the following statements:

(A) MSP is declared by the government every year to provide incentives to the farmers for raising the production of crops.

(B) Buffer stock is created to distribute food grains in the deficit areas and among the poorer strata of society at a price lower than the market price.

Which of the following is correct?

Right Option : A
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Question : 3

Which of the following factors have led to an increase in maintenance cost of producing food grains by the government?

A Rising Minimum Support Price                          B Rising transport costs of FCI                     C Rising storage costs of FCI                     D Rising input costs of farmers

Right Option : D
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Explanation
 
 
 


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