(a) Minimum Support Price (MSP) – This is the pre-announced price at which the government purchases foodgrains particularly, wheat and rice from the farmer in order to crate a buffer stock. This price is announced by the government every year before the sowing season to give incentive to the farmers to raise the production of the desired crop. The rising MSPs have raised the maintenance cost of procuring food grains by the government as well as induced farmers to divert land from production of coarse grains to the production of these crops
(b) Buffer Stock – It is the stock of food grains particularly, wheat and rice which the government procures through the Food Corporation of India (FCI). The FCI purchases these cereals directly from the farmers of those states where they are in surplus. The price of these commodities is much before the actual sowing season of these crops. The food grains thus purchased by the FCI are kept in big granaries and are called Buffer Stock. Maintaining buffer stock is a step taken by the government in order to ensure food security in the country.
c) Issue Price – In order to help the poor strata of the society, the government provides them food grains from the buffer stock at a price much lower than the market price. This subsidized price is known as the Issue Price
(d) Fair Price Shops – The foodgrains procured by the government through FCI is distributed to the poor section of the society through ration shops. The Ration Shops are called Fair Price Shops because food grains are supplied to the poor through these shops at much reasonable and a fair price than the market price which is often high. Any family with a ration card can purchase stipulated amount of food grains, sugar, kerosene etc. every month from the nearby fair price shop.
