(i) As we know agricultural production depends on natural factors like rainfall climate etc. These natural factors create a situation of drought or surplus production.
(ii) In such a situation for helping farmers in case of drought the government should fix the price lower than the market price (price ceiling) and incase of surplus production the government should fix the price higher than the market price(price floor)
(iii) Surplus or shortages should be met by the government from its buffer stock operation through public distribution system.(PDS) such as ration shops or fare price shops.
