Understanding Buffer Stock Schemes and the Common Agricultural Policy

The video tutorial covers buffer stock schemes as a government intervention to stabilize commodity prices. It explains the dynamics of commodity markets, highlighting the price inelasticity of supply and demand. The operation of buffer stock schemes is detailed, showing how they stabilize prices by buying and selling commodities. Challenges such as storage costs and financial limitations are discussed. The video also touches on the EU's Common Agricultural Policy, which historically provided guaranteed prices to farmers, leading to inefficiencies and surpluses.

What is a buffer stock scheme and how does it function?

Explain the concept of price inelasticity of supply in commodity markets.

How do shifts in demand and supply affect price volatility in commodity markets?

What impact does high price volatility have on producers and consumers?

How does the buffer stock agency manage to stabilize prices in the market?

Describe the two main rules that a buffer stock agency follows.

Explain how price bands operate within buffer stock schemes.

What are the potential downsides of implementing buffer stock schemes?

What challenges do buffer stock schemes face regarding storage?

Discuss the role of the Common Agricultural Policy (CAP) in relation to buffer stock schemes.