Buffer Stock Scheme Diagram. This estimate is the scheme s target price and obviously determines the maximum and minimum price boundaries. Diagram of buffer stock scheme if there is a very good harvest and supply increases to s2 the market price would fall to p2.
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In the diagram above the desired price and quantity of goods in the buffer stock scheme is p q lets assume the buffer stock is for carrots. Diagram of buffer stock scheme if there is a very good harvest and supply increases to s2 the market price would fall to p2. This price is below the target price tp to maintain the price at tp the government will need to buy the surplus stocks q2 q1 and store the goods.
In the diagram it can be observed that in case the price of the stocks decreases from p to p2 at times of the good harvests then the stocks will be bought or stored in order to prevent falling of the prices of the goods below a target price range i e with this buffer stock mechanism the price will adjust itself to the normal target price range.
This price is below the target price tp to maintain the price at tp the government will need to buy the surplus stocks q2 q1 and store the goods. Analysis diagram for a buffer stock scheme the diagram below illustrates the operation of a buffer stock scheme. But once you have these diagrams well understood buffer stock programmes offer great opportunities for evaluation. If there is a bumper harvets for carrots and the supply curve shifts right s s2 the government must buy up the quantity q q2 in order to restore the market to the equilibrium level p q.
