January 2, 2021 | By Daljit Singh
Author: Daljit Singh
The Essential Commodities (Amendment) Bill, 2020 was introduced to amend the Essential Commodities Act 1955. The Act empowers the central government to control the production, supply, distribution, storage, and trade of essential commodities which was constitutionally Fall under the States jurisdiction. It is cLaimed by the Central Government that The Bill seeks to increase competition in the agriculture sector but a little Glimpse will expose the Loop Holes that not only the Primary Producer (Farmer) will be affected by it but average Consumer will be most affected by it.
• Regulation of food items: The Bill provides that the central government can only regulate the supply of certain food items including cereals, pulses, potato, onions, edible oilseeds, and oils, only under extraordinary circumstances. Such circumstances include: war, famine, extraordinary price rise, and natural calamity of grave nature.
This means essential Commodity will only be declared and regulated at specific special circumstances than that means in Normal circumstances they are not essential commodities. Hence no commodity is essential anymore. Secondly who will describe which circumstances are of Grave Nature.
• Imposition of stock limit: The central government can only regulate the stock of an essential commodity that a person can hold. The Bill specifies that stock limits should be imposed only based on price rise Provided that such order for regulating stock limit shall not apply to a processor or value chain participant of any agricultural produce, if the stock limit of such person does not exceed the overall ceiling of installed capacity of processing, or the demand for export in case of an exporter.
This mean Stock limit is only evaluated on the bases of installed capacity which has no limits that how much a company can stock it all depends on the demand for exports which bring the question that demand for competitive agriculture is always there at cheaper rates for Example two primary Wheat producing Countries Price USA per tonne in 2020 is $186.01 (INR 13702.22 per tonne INR 1371 per Quintal) and Australia is $203.19 (INR 14513.67 per tonne INR 1452 per Quintal) (http://data.worldbank.org/data-catalog/commodity-price-data). Above prices are almost 500 INR per Quintal cheaper than Indian MSP Purchase that means the Exporter had to buy cheaper than international market to make a profit.
Experts on Trade and Economics know that Fals Export Demands are created all the time to buy domestic products to benefit financially or to meet future predicted demands.
Governments around the world imposes price ceilings in order to keep the price of some necessary good or service affordable but in Indian political structure this may vary on various political Scenarios. As we saw in first clause of deregulated Essential Commodities these Price Ceilings can be politically inspired.
Economists believe those who manage to purchase the product at the lower price given by the price ceiling will benefit, but sellers of the product will suffer, along with those who are not able to purchase the product at all.
• Exemption: The Bill provides that any stock limit imposed on agricultural produce will not apply to a processor or value chain participant. A value chain participant includes any person engaged in value addition to the produce at any stage, starting from production in the field to final consumption.
The Most Important point to note in this clause is that the corporations are added in the value chain as a new competitor to buy Agriculture produce who has been given unlimited excess to buy any food item and store it. This will Enable the companies buying products to control the supply of food chain and they can easily starve the market by stock pilling the commodities that will increase prices for consumer.
Every year Essential commodity list is amend based on supply and demand we know that how some products were taken out from list to drive the prices down and some added with less supply to increase the prices these decisions are somewhat based on political reasons just to benefit some major corporations.
It also no hidden truth that Adani Group of companies are already built and Building Warehouses and Silos around India. Currently Adani’s warehouses store 505000 Metric tonnes of Grains in its warehouses.
According to Economic times In June 2016 State-run Food Corporation of India (FCI) has already entered into an agreement with Adani group for construction of two silos to store wheat, FCI has also Entered a 30 year Rental Contract with Adani.
After this amendment in Essential commodity Act Adani can buy directly from farmers and store for himself. Adani group of Companies is just one company and its even operating way before the new amendments came in to effect.
ts no Hidden fact that Open market is the New World Order and a phenomenon actively progressed by World Trade Organisation (WTO). Developing countries including India Is actively in talks with WTO to engage in free trade in agriculture sector. These amendments are a major break through for corporations in that direction.
We are going through a very complicated pandemic and we know that how important food security is in desperate circumstances. Currently India is very much self sufficient in its food security these laws will expose India’s food basket for exploitation.
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