Buffer Stock of Food Grains in India: Concept, Advantages, Issues & Way Forward

Learn what buffer stock means, its role in ensuring food security and price stability in India. Explore advantages, challenges like fiscal burden and storage issues, and reforms suggested by the Shanta Kumar Committee to improve buffer stock operations.

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Buffer stock refers to a reserve of a commodity that is used to offset price fluctuations and unforeseen emergencies. Buffer stock is generally maintained for essential commodities and necessities like food grains, pulses etc.

The concept of a buffer stock was first introduced during the 4th Five Year Plan (1969-74) and a buffer stock of 5 million tonnes of food grains was envisaged. The buffer stock figures are normally reviewed after every 5 years.

Purpose of Buffer Stock of Food Grains in India

Buffer stock of food grains in the Central Pool is maintained by the Government of India...

Meeting the prescribed minimum buffer stock norms for food security
Monthly release of food grains for supply through Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS)
Meeting emergency situations arising out of unexpected crop failure, natural disasters, etc.
Price stabilisation or market intervention to augment supply so as to help moderate the open market prices.

Advantages of Buffer Stock of Food Grains in India

Stable prices help maintain farmers’ incomes. A rapid drop in prices can make farmers go out of business, which leads to structural unemployment.
Investment in agriculture due to stable income of farmers.
Positive externalities e.g., helps rural communities. A drop in price could cause a negative multiplier effect within rural areas.
Prevent excess prices for consumers and help reduce food inflation.
It helps to maintain food supplies and avoid shortages.
Government making profit- If it buys during a glut and sells during a shortage, it can make a profit.
Food security - fulfill the goal of providing food grains to every citizen.

Problems Associated with Buffer Stock of Food Grains in India

Fiscal burden- Cost of buying excess supply could become quite high for the government and may require higher taxes.
Environmental impacts-It could even encourage excess use of chemicals to maximise yields
High cost of maintenance - such as logistics, storage and administrative cost.
Issues of leakages - it is sometimes diverted to black marketing, ghost beneficiaries.
Some goods cannot be stored in buffer stocks, e.g., fresh milk, meat etc.
Inefficient storage management - Warehouse are not technically updated, malpractices, corruption at field level.
Trade distorting practices - many of the countries think that procurement and maintaining buffer stock would distort market.

Way forward

A 6 member committee formed i.e., Shanta Kumar committee for improving operational efficiency of FCI and maintaining storages.

Adopting DBT - So that MSP and food subsidy amount can be directly transfers into the account of beneficiaries.
Reduction in no of beneficiaries - under NFSA from 67-40%
Private participation - to procure and store grains.
Transfer of procurement - to the states which have higher capacity e.g. Maharashtra ,UP etc.
Abolition of levy rice and allow mills to sell in market.
Greater flexibility to FCI - for procuring and dealing with operational stocks.

Buffer Stock of Food Grains in India: Concept, Advantages, Issues & Way Forward FAQs

Buffer stock is a reserve of essential commodities, like food grains, maintained to stabilize prices and manage emergencies.

To ensure food security, control price fluctuations, supply food through welfare schemes, and handle emergencies like crop failure.

It stabilizes farmer incomes, prevents food shortages, controls inflation, and can generate profit for the government.

High fiscal costs, storage inefficiencies, risk of leakages, environmental impacts, and market distortion concerns.

Adopting DBT, reducing beneficiaries, involving private players, transferring procurement to capable states, and increasing FCI’s flexibility.

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