Economics

Why buffer stock is created by the government?


SOLUTION
The government creates buffer stock of food grains to protect the interest of both farmers as well as consumers. Farmers interest is protected when they are assured to get a certain minimum price for their crops. This price is called 'Minimum Support Price'. The interest of the consumers are protected when the procured food is made available to the consumers at the subsidized rates.
A buffer stock help resolve the problem of shortage of food during the adverse weather conditions or during calamities.
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