Buffer stock is the stock of foodgrains procured by the government through Food Corporation of India...........

Buffer stock is the stock of foodgrains procured by the government through Food Corporation of India (FCI). Consider the following statements in relation to the FCI procurements.

1. The FCI purchases wheat and rice from the states where there is a surplus.

2. Minimum support price is the price announced by the FCI before the sowing season.

3. Issue price is the price issued by the FCI for their procurements based on the market price.

Select the correct ones.

1 and 2

Only 2

Only 1

All the above

Explanation:

The FCI purchases wheat and rice from the farmers in states where there is surplus production. The farmers are paid a pre-announced price for their crops. This price is called Minimum Support Price. The MSP is declared by the government every year before the sowing season to provide incentives to the farmers for raising the production of these crops. This is done to distribute foodgrains in the deficit areas and among the poorer strata of society at a price lower than the market price also known as Issue Price.