Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the…

Question

Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss.

Ghissu Editorial · Accepted Answer

Buffer stocks stabilise agricultural prices by setting a floor for farmers through procurement and a ceiling for consumers through timely releases, but excess stocks, storage losses, regional mismatch and scarce perishable storage weaken them. A 20 lakh tonne pulses buffer from 2016 helped pulses price volatility subside.

**Introduction**

Despite a record 357.73 million tonnes of foodgrain in 2024-25 (PIB), wheat, pulses and onion prices spiked in 2023. Buffer stocks are the state's main stabiliser, but storing them well is hard.

**Importance of Buffer Stocks for Price Stability**

1. **Floor for farmers**: MSP procurement in the harvest glut stops farm-gate prices from collapsing.
2. **Ceiling for consumers**: Open Market Sale releases cooled wheat prices in 2023, and Bharat Dal sold buffer chana at a fixed price.
3. **Pulses lesson**: A 20 lakh tonne pulses buffer (2016) helped volatility fall from a 2016 peak of 9 to 1 by May 2017 (Economic Survey 2025-26).
4. **Shock absorber**: Stocks fed 80 crore people under PMGKAY during Covid-19 and cushion drought years.

FIGURE: p19-4 | Pulses price volatility subsided after the 2016 market interventions (Economic Survey 2025-26)

**Challenges in Storing Buffer Stock**

1. **Excess over norms**: Stocks have often run at over double the 2015 norms, raising FCI's carrying cost.
2. **Losses and quality**: Open cover-and-plinth storage rots grain, which drew the Supreme Court's PUCL (2010) remark.
3. **Regional mismatch**: Storage sits in Punjab and Haryana, far from deficit regions.
4. **Perishables and WTO**: Onion buffers lack scientific storage, and rice support at 15.22% in 2021-22 invites WTO challenge.

**Way Forward**

1. **Modern storage**: Steel silos and the cooperative grain storage plan (2023).
2. **Dynamic norms**: Yearly review and early OMSS liquidation.
3. **Warehouse receipts**: e-NWRs, as the Shanta Kumar Committee (2015) urged.

**Conclusion**

Lean, well-kept and timely released buffers can protect both farmer and consumer and secure resilient food security.

Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss.

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