Evaluate the view that the government should create a buffer stock of orange juice.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The major reason for the government to create a buffer stock of any commodity is if that commodity is very important to the economy of the country or perhaps of some part of the country.  A buffer stock would help to even out the fluctuations of supply and demand and keep prices more stable and predictable.  However, there would be costs to this.  The government would, at the very least, have expenses associated with storing the buffer stock and with administering the program.  There does not seem to be much value in doing this since orange juice prices are not vital to American consumers.  Perhaps the Florida state government might create a buffer if orange juice is a big enough part of its economy.  But there is little reason for the US government to do so.

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