Why buffer stock is created by the government?

Ah, that is a very pertinent question. A government creates a buffer stock for two primary reasons: food security and price stability.

Think of it as a national safety net, usually for essential food grains. When there is a bumper crop and a surplus of food, the government buys the excess. This action supports farmers by preventing prices from collapsing. It ensures they receive a fair price for their produce.

Conversely, during a poor harvest or a national crisis, a shortage occurs. The government then releases these stored grains into the market. This increases the supply, which keeps prices from soaring and ensures food remains affordable for everyone. It is a tool for managing extremes.