The Indian government has recently announced, under the Essential Commodities Act 1955, that ‘soya meal’ will be considered an essential commodity until the 30th of June, 2022. This decision is intended to curb unfair practices such as hoarding and black marketing which can potentially inflate the prices of soya meal. In turn, this move will improve the availability of the commodity for consumers, including poultry farms and cattle feed manufacturers.
About Soybean Meal
Soybean meal holds significant value as a protein source for feeding farm animals. In fact, it constitutes almost two-thirds of the total global output of protein feedstuffs, trumping all other major oil meals and fish meals. Alongside its use in animal feed, soybean meal also finds its way into human diets in certain countries. Its production is a by-product of the extraction process of soybean oil.
Understanding the Essential Commodities Act 1955
The Essential Commodities Act (ECA) 1955 was enacted during a period when India was grappling with food shortages due to consistently low levels of foodgrain production. The country had to rely heavily on imports and assistance, like wheat imports from the US under PL-480, to meet its population’s dietary needs. To deter practices like hoarding and black marketing of foodstuff, the ECA 1955 was put into effect.
While the Act does not provide a specific definition for essential commodities, Section 2(A) states that an “essential commodity” refers to a commodity specified in the Schedule of the Act. It grants the central government the authority to add or remove a commodity from the Schedule based on public interest and following consultation with state governments. The act primarily aims at controlling inflation by enabling the state governments to regulate trade in a wide assortment of commodities.
The Ministry of Consumer Affairs, Food and Public Distribution is responsible for implementing the Act and declaring a commodity as essential allows the government to regulate its production, supply, distribution and even impose stock limits.
Controversies Surrounding the Essential Commodities Act 1955
The Economic Survey 2019-2020 pointed out that the government’s intervention under the ECA 1955 often disrupted agricultural trade whilst being unsuccessful in controlling inflation. It noted that this intervention paves the way for rent-seeking – an economic term referring to unproductive income, including proceeds from corruption – and harassment.
Traders, as a result, tend to purchase much less than their usual capacity leading to farmers suffering significant losses during times of surplus harvests of perishable items. This lack of investment in cold storage, warehouses, processing and exports results in farmers failing to secure better prices for their produce.
In response to these issues, the Parliament passed the Essential Commodities (Amendment) Bill, 2020. However, due to widespread protests by farmers, the Government had to repeal this law.
The Way Forward
When the ECA 1955 was introduced, India was not self-sufficient in food grain production. Today, the country has a surplus of most agricultural commodities. Therefore, amending the ECA 1955 can be seen as an important initiative by the government to fulfill its objective of doubling farmers’ income and promoting ease of doing business.
