Similarly, when product availability is poor and below average, the government begins to release buffer stock, which prevents the price from rising above average. This avoids price volatility and maintains balance in the demand-supply cycle. In the first case, the buffer stock of the product is released, which increases the availability of the product on the market and helps to lower prices so that everyone can afford it, and in the second scenario, where there is excessive availability of the product, part of the product can be stored and stored in stock. , which will help to contribute to it. normalize the price of the product. The buffer stock refers to the excess amount of goods used to manage price fluctuations and unpredictable emergencies in the market. What is a common practice for maintaining a buffer stock of essential raw materials and the simple necessity is like grains, legumes, etc.? In this case, there would be more suppliers than customers, and to sell their shares, they would reduce prices relative to their competitors. Buffer storage systems aim to stabilize the market price of agricultural products by buying up stocks of agricultural products when crops are plentiful and by selling stocks of the product on the market when supply is low. In 2017, Côte d`Ivoire and Ghana planned to relaunch a buffer storage system for cocoa. Côte d`Ivoire and Ghana control more than 60% of the world`s supply. In 2017, they will face a global surplus of 371,000 tonnes, resulting in lower prices and lower export earnings.
In such cases, the price of onions would be very high for an average customer, and people cannot buy onion. During this period, the stock of onion pads would be released in order to meet a certain demand from customers and to lower the price of the onion. A buffer storage system (usually as an intervention tank, “always the normal reservoir”) is an attempt to use the storage of raw materials for price stabilization purposes throughout an economy or in an individual (goods) market. [1] In particular, when there is a surplus in the economy, goods are purchased, stored and then sold from those stores when economic difficulties occur in the economy. [1] Depending on the buffer stock and demand, the price of onion would be reduced to about $2.50 per kilo. Although not all are able to buy onions as needed, sales would be higher than at $4 per kilo. This stabilizes onion prices again and brings it to about $0.85 per kilo. It depends on the shares purchased by the government. One way to flatten price fluctuations is to set up price support systems using buffer stocks. But many of them have a turbulent history. Côte d`Ivoire plans to build warehouses with a capacity of 250,000 tonnes of cocoa.
One document indicated that intervention stock periods had been relatively successful in stabilizing farm incomes. (Commodity buffer stock redux: The role of the International Cocoa Organization in 2011 prices and revenues. Raymond Swaray Link) To maintain the price at TP, the government must purchase excess inventory (Q2-Q1) and store the goods. This reduces supply in the market and keeps actual prices at the target price. The main objective of buffer stock is to achieve a stable price and a stable balance between supply and demand.