2.1. Introduction

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). So, it neutralizes the fluctuation in production of a given crop, so that the prices may remain stable.

In times of surplus production, government procures the crops from farmers through MSP so that the farmers do not suffer negatively for producing more. In times of deficit, government releases the buffer stocks in a phased manner so that interests of the consumers do not suffer, and they are able to meet their nutritional requirements at reasonable prices.