Essential Commodities Amendment Bill, 2020

The Essential Commodities (Amendment) Bill 2020 with provisions to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities was passed by Rajya Sabha.

Background of Essential Commodities (Amendment) Bill, 2020

While India has become surplus in most Agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as the entrepreneurial spirit gets dampened due to Essential Commodities Act. Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities. The legislation will help drive up investment in cold storages and modernization of food supply chain. It will help both farmers and consumers while bringing in price stability. It will create competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.

Key Features of Essential Commodities (Amendment) Bill, 2020

(a) Under the Essential Commodities Act, 1955, the Government regulates the production, supply and distribution of certain commodities it declares ‘essential’ in order to make them available to consumers at fair prices. The bill removes cereal, pulses, oilseed, edible oil, onion and potatoes from the list of essential commodities.

(b) It requires that imposition of any stock limit on agricultural produce must be based on price rise. A stock limit may be imposed only if there is:

• A 100% increase in retail price of horticultural produce; and
• A 50% increase in the retail price of non-perishable agricultural food items.

Issues with Essential Commodities (Amendment) Bill, 2020

(a) Easing of regulation of food items would lead to exporters, processors and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when prices increase. This could undermine food security since the States would have no information about the availability of stocks within the State.

(b) As the bill removes cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities, it will deregulate the production, storage, movement and distribution of these important food commodities.