Center asks States to impose a limit on stocking of Pulses

• In an attempt to arrest the spiralling prices of pulses, the Union government on Friday directed the States to impose a stock limit on all pulses except moong till October 31.
• The Department of Consumer Affairs issued the Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2021 prescribing the limits which have been imposed with immediate effect.
• The stock limit of 200 tonnes has been imposed on wholesalers provided they do not hold more than 200 tonnes of one variety of pulses.
• On retailers, the stock limit will be 5 tonnes.
• In case of millers, the stock limit will be the last three months of production or 25% of annual installed capacity whichever is higher.
• For importers, the stock limit will be the same as that of wholesalers for stocks held or imported prior to May 15, 2021.
• And for pulses imported after May 15, the stock limit applicable on wholesalers will apply after 45 days from the date of customs clearance, the order said.
• If the stocks of entities exceed the prescribed limits, they have to be declared on the online portal of the Department of Consumer Affairs and have to be brought within the prescribed limit within 30 days of the notification of the order.

Schemes and Bodies related to the procurement of Pulses

National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED earlier than FCI),

• NAFED was established in 1958 and is registered under the Multi-State Co-operative Societies Act.
• It was set up with the object to promote Cooperative marketing of Agricultural Produce to benefit the farmers.
• It undertakes procurement of Pulses, Onion. Agricultural farmers are the main members of NAFED, who have the authority to say in the form of members of the General Body in the working of Nafed.
• The objectives of the NAFED shall be to organize, promote and develop marketing, processing and storage of agricultural, horticultural and forest produce, distribution of agricultural machinery, implements and other inputs, undertake inter-state, import and export trade etc
• It oversees the Price Stabilization Fund, Operation Greens and PSS of PM AASHA.
• After 2017, Pulses Buffer Stock comes from NAFED through Price Stabilization Fund.

Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA), 2018 - MoAFW

1. It is an umbrella scheme aimed at ensuring remunerative prices to the farmers for their produce.
2. The main feature is that Central agencies would procure pulses and oilseeds directly from farmers.
3. It allows cash payment to farmers or procurement by Private traders.
4. It is a Centrally Sponsored Scheme.
5. Main crops covered are moong, urad, arhar, groundnut and soya bean.
6. The highest sanctioned procurement is in Maharashtra. It is comprised of 3 sub-schemes: Price Support Scheme, Price Deficiency Payment System and Pilot of Private Procurement & Stockist Scheme.
7. Price Support Scheme (PSS) -
   1. Physical procurement of pulses, oilseeds and Copra will be done by Central Nodal Agencies with proactive role of State govts. (Operation Greens = TOP).
   2. Both NAFED and FCI will take up PSS operations in states /districts.
8. Price Deficiency Payment Scheme (PDPS)
   1. It will cover all oilseeds (but it does not involve any physical procurement of crops) for which MSP is notified. It is modelled on Bhavantar Bhugtan Yojana of MP.
   2. In this direct payment of the difference between the MSP and the selling price will be made to pre-registered farmers.
9. Pilot of Private Procurement & Stockist Scheme (PPSS)
   1. States can use it on pilot basis PPSS which is for oilseeds, in addition to PDPS.
   2. It involves physical procurement of the oilseeds, it shall substitute PSS/PDPS in the pilot districts.

Price Stabilisation Fund (PSF) Scheme, 2015 – Ministry of Food, Civil Supplies and Consumer Affairs

• It is a Central Sector Scheme with a fund of Rs. 500 Crore for agricultural commodities was announced in Budget 2014-15 with a view to mitigate volatility in the prices of agricultural produce.
• PSF was transfered to Dept of Consumer Affairs from 2016.
• It aims to support market interventions for price control of perishable agri-horticultural commodities during 2014-15 to 2016-17.
• Initially it was for onion and potato only and pulses were added subsequently. After 2017, Pulses Buffer Stock comes from NAFED through Price Stabilization Fund.
• Procurement of these commodities will be undertaken directly from farmers at farm gate/mandi and made available at a more reasonable price to the consumers. MSP system also has some price tempering properties, but it is from the perspective of the farmers. But the PSF is focused more at consumers.
• PSF Scheme provides for advancing interest free loan to States/ UTs and Central agencies (Not individuals).
• States will have to set up a ‘revolving fund’ (constantly replenished) to which Centre and State will contribute equally (50:50). But for Northeast it is 75:25.
• The PSF will be managed centrally by a PSF Management Committee (PSFMC) which will approve all proposals from State Govts and Central Agencies.
• The PSF will be maintained as a Central Corpus Fund by SFAC. SFAC (also for eNAM) will act as Fund Manager.
• SFAC (MoAFW) (Small Farmers Agribusiness Consortium):
  • SFAC is a society promoted by Ministry of Agriculture
  • For linking agriculture to private businesses and investments and technology.

The Essential Commodities Act, 1955

• It was enacted to ensure the easy availability of essential commodities to consumers and to protect them from exploitation by traders.
• The Act provides for the regulation and control of production, distribution and pricing of commodities which are declared as essential. Center can fix MRP of Essential commodities.
• States are the implementing agencies to implement the EC Act, 1955 and the Prevention of Black marketing & Maintenance of Supplies of Essential Commodities Act, 1980. Food and civil supply authorities execute the provisions of the Act.
• This is reviewed periodically at the National Level. Anyone cannot stockpile anything beyond a certain limit. A State can choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity. Currently restrictions like licensing requirements, stock limits and movement restrictions have been removed from ~ all agri commodities.
• Wheat, Pulses and edible oils, edible oilseeds and rice are the exceptions where States can impose some temporary restrictions.
• 7 major commodities are covered under the act: 1. Drugs; 2. Fertilizer; 3. Foodstuffs, including edible oilseeds and oils; 4. Hank yarn made wholly from cotton; 5. Petroleum and petroleum products; 6. Raw jute and jute textile; 7. Seeds of food-crops and seeds of fruits and vegetables; recently Masks and Sanitizers are included in ECA.
• Benefits of ECA, 1955
  1. The ECA gives consumers protection against irrational spikes in prices of essential commodities.
  2. The Government has invoked the Act umpteen times to ensure adequate supplies.
  3. It cracks down on hoarders and black-marketeers of such commodities.
  4. State agencies conduct raids to get everyone to toe the line and the errant are punished.
• Negatives of ECA,1955:
  1. Less investment in warehousing and storage infrastructure. The fear of the ECA may explain the lack of formal warehouses and silos in India.
  2. Encourages a group of grey market intermediaries between farmer and the end consumer to come up.
  3. It becomes a tool to expropriate traders who may have stored products during harvest to sell during the lean months.
  4. It may not always be possible to differentiate between genuine stock and speculative hoarding.
  5. In Sep 2019, Center used ECA to impose stock limits on onions after heavy rains wiped out a quarter of the kharif crop and led to a sustained spike in prices. But it actually increased price volatility.
  6. Thus in the long term, the Act disincentivises development of storage infrastructure, thereby leading to increased volatility in prices following production/ consumption shocks — the opposite of what it is intended for.
  7. Economic Survey 2019-2020 recommends to scrap ECA,1955
• 2020 Amendment to ECA, 1955
  1. Commodities like Cereals, Pulses, Oilseeds, Edible oils, Onion and Potatoes will be removed from the list of essential commodities.
  2. This will remove fears of private investors of excessive regulatory intereference in their business.
  3. It will attract FDI/ Foreign investment in Agri sector and investment in cold storages and modernization of food supply chain.