Buffer Stock Scheme. Used by the government to reduce price fluctuations by buying and selling a commodity to ensure price remains within a band.
Below, in the diagram, the government sets the band with a maximum price P1 and minimum price P2.
A bumper harvest means supply S1 is high and price P4 is low. Because the price P4 falls below the minimum price P2, the government intervenes in the market and buys Q2 – Q1 of the commodity to increases its own stockpile and raise the price back up to the minimum price P2.
A bad harvest means supply is low and price is high. Because the price P3 is above the maximum price P1 the government intervenes in the market and sells Q4 – Q3 from its stockpile of the commodity to lower the price back down to the maximum price P1.