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Write notes on: (a) Minimum Support Price (b) Buffer Stock (c) Issue Price (d) Fair Price Shops

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Write notes on:

(a) Minimum Support Price

(b) Buffer Stock

(c) Issue Price

(d) Fair Price Shops

1 Answer

(a) Minimum Support Price: This is the pre-announced price at which the government purchases food grains particularly, wheat and rice, from the farmers to create a buffer stock. This price is announced by the government every year before the sowing season as an incentive to the farmers to raise the production of the desired crop. The rising MSPs have raised the maintenance cost of procuring food grains by the government as well as induced farmers to divert land from the production of coarse grains to the production of these crops.

(b) Buffer Stock: It is the stock of food grains, particularly wheat and rice, which the government procures through the Food Corporation of India (FCI). The FCI purchases these cereals directly from the farmers of those states where they are in surplus. The price of these commodities are announced much before the actual sowing season of these crops. The food grains thus purchased by the FCI are kept in big granaries and called ‘Buffer Stock’.

(c) Issue Price: In order to help the poor strata of the society, the government provides them food grains from the buffer stock at a price much lower than the market price. This subsidised price is known as the ‘Issue Price’.

(d) Fair Price Shops: The food grains procured by the government through the Food Corporation of India are distributed among the poorer sections of the society through ration shops. These are called ‘Fair Price Shops’ because food grains are supplied to the poor through these shops at a price lower than the market price, which is often high.


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