3.2.5—Buffer stock schemes

A buffer stock scheme sets a target price or price band. An agency buys surplus when market price falls below the target and sells stock when price rises above it.

The scheme requires storage, finance and a credible target. It can stabilise producer income but risks unsold spoilage, high costs or running out of stock if the target is unrealistic.

To support a crop price, the agency buys harvest surpluses in a bumper year and releases stored grain after a poor harvest.

Buying surplus does not make it disappear economically; storage and disposal costs remain.