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Edible Oil and Oilseeds

Edible Oil and Oilseeds

Context:

  • Food inflation especially in staples like pulses and edible oil is the last thing any political party wants in the run up to a crucial election.

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Key Details:

  • Essential Commodities Act 1955 is aimed at ensuring adequate availability of the scheduled essential commodities at fair prices to the common people.

  • Recently despite reduction in import duty, a sudden spurt in prices Edible oils/oilseeds has been observed which may be due to alleged hoarding of it by the stock holders.

Government Intervention:

  • Government has asked for declaration of stocks held by traders, millers, stockists etc which would be verified by the state government.

  • Also states have been asked to monitor prices of edible oil and oilseeds on a weekly basis.

  • This would be the second intervention by the central government in controlling the prices of edible oil.

  • Earlier in August, import duty of crude soya bean and sunflower oil as well as refined sunflower and soya bean oil was reduced.  

Need for interventions when a new harvest is just round the corner?

  • Two main reasons can be attributed to the decision so close to the start of the kharif harvest which is expected to start next month onwards.

  • As the letter states, the central government has taken this step with an eye on price increase in the edible oils.

  • Ahead of the state polls including that of Uttar Pradesh, food inflation is the last thing any government wants to face.

Where else has the government stepped in to control prices?

  • Earlier this year spike in prices of dal had seen government going all out in the pulses sector.

  • It started with early announcement of import quotas in March and then doing away with the license requirement for imports in May.

  • Government asked millers, stockists and traders to declare the stock with them and directed the state governments to verify the same.

  • When all the above steps failed to have desired effect, on July 2, the central government imposed stock limit on processors and traders which made excess holding a crime.

National Mission on Edible Oil-Oil Palm (NMEO-OP)

  • The Centre will spend Rs 11,000 crore on a new mission to ensure self-sufficiency in edible oil production.

  • This financial outlay will be over a five-year period.

  • It has been launched at a time when India’s dependence on expensive imports has driven retail oil prices to new highs.

  • Palm oil region: North-eastern India and the Andaman and Nicobar Islands as prime locations for oil palm cultivation.

  • It would aim to reduce import dependence from 60% to 45% by 2024-25.

  • Oil Production: By increasing domestic edible oil production from 10.5 million tonnes to 18 million tonnes, a 70% growth target.

  • It projected a 55% growth in oilseed production, to 47.8 million tonnes.

Essential Commodities Act, 1955:

  • Essential Commodities Act 1955 is aimed at ensuring adequate availability of the scheduled essential commodities at fair prices to the common people.

  • Ironically, imposition of stock limits come almost a year after the Narendra Modi-led government amended the Essential Commodities Act, 1955.

  • To delink oilseeds, pulses, onions etc from the Act and thus freeing them from stock limit imposition.

  • However, since the Supreme Court has stayed the implementation of the Acts in January, the central government has taken refuge in the Act and imposed stock limits to control prices.

Source: Indian Express