Evaluate the role of buffer stock systems

A buffer stock system is typically used in a market for a commodity, such as wheat, which may be vulnerable to large changes in supply. This could be due to weather for example, and it is not uncommon for countries to often go an entire season without being able to produce a crop. Buffer stock schemes are used to try to reduce volatility in the supply of a commodity and keep prices from moving too far from the equilibrium in a normal year. In its simplest form, it involves storing more when crop yields are strong to offset the time periods when crop yields are low.