A buffer stock scheme is a government or international intervention strategy designed to stabilize prices of volatile commodities, such as agricultural products, by managing supply fluctuations.

This is accomplished by accumulating surplus stocks during periods of oversupply—when prices tend to fall—and releasing them during shortages, which would otherwise cause sharp price rises. Such schemes help mitigate the boom-bust cycles in markets prone to supply shocks, ensuring more predictable prices for producers and consumers.

Example: In the coffee bean market, governments might release stored reserves following a poor harvest to curb excessive price surges. Conversely, during abundant yields that threaten to drive prices down significantly, they purchase excess production to build up stocks and support stable income for farmers.