Essential Commodities (Amendment) Ordinance, 2020

Essential Commodities Act, 1955 was amended by Essential Commodities (Amendment) Ordinance, 2020, which was promulgated on June 5, 2020.  The amendments to the Act has certainly been brought in to mitigate the effects of COVID 19 pandemic as announced by Finance Minister as ‘Aatmanirbhar package’ in May, 2020.

Object:

  • Increasing competitiveness in agriculture sector
  • Enhancing income of farmers
  • Protecting interest of the consumers
  • liberalise the regulatory system

Key changes:Regulation of food stuffs under extraordinary circumstances:

Central Government will regulate the supply of food stuffs including cereals, pulses, potato, onions, edible oilseeds and oils as may be specified in official gazette only under extraordinary circumstances that includes  (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.

Stock limit can be imposed only in case of price rise. Any order for regulating stock limit of any agriculture produce can be issued under the Act only if there is:

  • 100% increase in retail price of horticultural produce; or
    • 50% increase in the retail price of non-perishable agricultural food stuffs,

Retail Price is to be calculated as the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

Exceptions:

Stock limit will not apply to a processor or value chain participant of agricultural produce if stock held by such person is less than the: (i) overall ceiling of installed capacity of processing, or (ii) demand for export in case of an exporter.  A value chain participant in relation to agricultural product means and includes a set of participants from production of any agricultural produce in the field to final consumption, involving processing, packaging, storage, transport, and distribution of agricultural produce, where at each stage a value is added to the product.

  • This amendment will not apply to any government order relating to the Public Distribution System or the Targeted Public Distribution System. 

Consequences:

  • It can be said that these changes in 65 years old Act will surely bring in more private players into this filed, which was highly regulated or interfered with before the amendment.
  • Benefits to the farmers will increase. Earlier due to excessive regulations, the agriculture produce used to get trapped into vicious cycle of middlemen. There was no check of these unregulated sales, which in return negatively affected the farmers and the final consumers. Now that regulations are eliminated this would open various avenues to the farmers. It wouldn’t be incorrect to say that after these amendments the farmers will be the king-pin of the agriculture produce. Two other ordinances which came along with this amendment i.e. Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020 and Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020 will also uplift the agriculture sector in times to come.