Single price scheme Buffer stock scheme

a single price buffer stock scheme, such ever-normal granary

as illustrated, term buffer stock scheme can refer scheme floor price , ceiling price equal: in other words, intervention in market ensure fixed price. in order such stores effective, figure average supply must adjusted periodically keep broad trends toward increased yield. is, must average of probable yield outcomes @ given point in time.

the diagram shows supply , demand grain market. s3 , s2 show supply of grain in high , low yield years respectively, , s1 shows average supply. government buys grain during high yield years , sells grain during low yield years. price stabilized p3, rather fluctuating between p1 , p2, did before.