Buffer Stock Scheme


	Buffer Stock Scheme
	Advantages They reduce commodity price fluctuations There is a greater certainty in the market, leading to more investment They help to ensure provision of commodities for consumers, even in years of poor harvest	Disadvantages A series of good harvest could put too much pressure on the agency that has to keep buying additional stock. Costs in storing and security of stockpiles Stock may be perishable, so agencies lose money by having to destroy their stock. A series of poor harvests may lead to the agency running out of stock.
	Evaluation

They reduce commodity price fluctuations
There is a greater certainty in the market, leading to more investment
They help to ensure provision of commodities for consumers, even in years of poor harvest

A series of good harvest could put too much pressure on the agency that has to keep buying additional stock.
Costs in storing and security of stockpiles
Stock may be perishable, so agencies lose money by having to destroy their stock.
A series of poor harvests may lead to the agency running out of stock.

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