Answer» Buffer stock is the reserve of food or other commodities that can be used later on during emergency conditions.Explanation: - There are two MAIN reasons why buffer stocks are created by the government.
- First, it is created so that the government has some reserve of food during the time of emergency like wars, or other natural calamities.
- Second, it is helpful in regulating the PRICE of commodities in the market.
- These stocks are created when there is a SURPLUS food or commodity, this huge quantity of that commodity can make the price in the market drop and farmers WOULD not be able to profit from their produce.
- So, the government buys the surplus from the farmers, create a buffer stock and then steadily releases these commodities which maintains its price in the market, neither MAKING it expensive or cheap.
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