To protect farmers during a bumper harvest,. the government usually
Answer Details
To protect farmers during a bumper harvest, the government usually sets a minimum price.
A bumper harvest refers to a situation where farmers have produced more crops than the market demands, leading to a surplus. When there is a surplus, the prices of crops can drop, and farmers may not be able to sell their crops for a reasonable profit. This can lead to financial losses for farmers and discourage them from producing crops in the future.
To prevent this situation, the government can set a minimum price that farmers must receive for their crops. By setting a minimum price, the government can ensure that farmers receive a fair price for their crops, and they are motivated to continue producing in the future. The government may also buy the excess crops from farmers and store them in a buffer stock. Later, when there is a shortage of crops in the market, the government can release the products from the buffer stock to stabilize the market price.
In contrast, setting a maximum price may not be effective in protecting farmers during a bumper harvest. A maximum price limit would prevent the market price from rising above a certain level, which could discourage farmers from producing crops in the future. Similarly, selling the excess to consumers may not be practical, as it may lead to lower prices and lower profits for farmers.