Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss. (2024, 15 Marks)

Paper	GS Paper 3
Word Limit	250 words
Syllabus Topic	Agriculture – Buffer stocks and food security

Model Answer

A buffer stock is a reserve of foodgrains, mainly wheat and rice, held by the government. The Food Corporation of India (FCI), set up in 1965, procures grain at MSP and keeps it in the Central Pool.

Importance for Price Stability

• Floor for farmers: Procurement at MSP prevents distress sale after a bumper harvest.
• Ceiling for consumers: Under the Open Market Sale Scheme (Domestic), FCI sells grain to cool prices. Example: wheat sales and Bharat Atta in 2023.
• Food security: Stocks feed the National Food Security Act, 2013 and PMGKAY.
• Shock absorber: Supported free ration during COVID-19 and droughts.
• Beyond cereals: The Price Stabilisation Fund keeps buffers of pulses and onion.

Challenges in Storage

• Excess stocks: Holdings often exceed buffer norms. This raises carrying cost and the food subsidy bill.
• Unscientific storage: Grain kept under CAP (Cover and Plinth) faces rain, pests and rodents.
• Regional imbalance: Storage is concentrated in Punjab and Haryana; eastern and north-eastern states lack capacity.
• Leakages: Pilferage, old godowns and high transport cost.
• Distortions: Open-ended procurement favours rice-wheat and drains groundwater.
• WTO limits: Public stockholding relies on the interim Bali Peace Clause (2013).

Way Forward

• Steel silos under PPP and the Grain Storage Plan in the Cooperative Sector (2023).
• Decentralised procurement and FCI restructuring, as suggested by the Shanta Kumar Committee (2015).
• Digital stock tracking and dynamic buffer norms.

Conclusion

Buffer stocks protect both farmers and consumers. Modern, decentralised storage can cut waste and cost. This will strengthen food security under SDG 2 (Zero Hunger).

Related PYQs

• What are the major challenges of Public Distribution System (PDS) in India ? How can it be made effective and transparent ? (2022)
• What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap? (2018)
• Food security bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (2013)

See all: UPSC GS3 Mains Model Answers | Also read: Food inflation and RBI (GS3 2024)