What are Buffer Stocks and Buffer Norms?
The reserve commodity which is stored for the purpose to check the unreasonable and sudden increase in the market price of the essential commodities due to various factors is called a Buffer Stock. These commodities are bought when they are available in abundance in the system, these are then stored and then sold when there is a shortage of these products. Generally buffer stock consists of commodities like food grain, oil, pulses, fuel etc.
The Government of India has given the task of procuring buffer stock to National Agricultural Cooperative Marketing Federation of India Limited (NAFED), Food Corporation of India (FCI) and Small Farmers Agri-business Consortium (SFAC)
Objective/Aim of Buffer Stock:
- It is maintained to fulfil the requirements of the Targeted Public Distribution Scheme(TDPS) and Other Welfare Scheme(OWS)
- Make sure that there is enough food for the citizens during a lean agricultural year where there is less produce
- At the time of emergency like a natural disaster, war etc buffer stock is used to supply foodgrain to the public.
- Prevent the prices of essential products to rise beyond a certain limit and stabilise the market.
What are Buffer Norms?
The minimum food grains which the Central government should maintain at the beginning of each quarter to ensure enough supply for public distribution system and other distribution schemes of the government.
Food Stock available in the central governments’ pool is the stock held by:
- State Government Agencies (SGAs)
- States which are taking part in the Decentralised Procurement Scheme
- Food Corporation of India(FCI)
The stock of food grains in the Central pool is distributed all around the year depending on the off-take and procurement trends. Therefore, the season of production and procurement is a major factor to determine the minimum food grain stocks required in any particular quarter of the year.
As of now, the stocking norms for buffer stock decided by the GoI comprises of:
- Operational Stocks
- The stock required to meet the monthly requirements under TDPS and OWS.
- Food Security Stocks
- The reserves to meet the procurement shortfall.
The food grains for issue under OWS and TDPS are considered as operational stock, whereas the surplus is considered as buffer stock and operational stock both. The stock which is over the minimum stockpiling norms is treated as excess stock and it is exported from time to time, extra allocations for some states or through open market sales.