States told to fix stock limits for onions, potatoes

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Essential Commodities Act used to curb hoarding; onion MEP raised

The government has imposed stock holding limits for onions and potatoes under the Essential Commodities Act to prevent hoarding and rein in prices.

Following requests from six states, the cabinet committee on economic affairs (CCEA) on Wednesday decided to empower the states to set stock limits for the two commodities.

The CCEA meeting, chaired by prime minister Narendra Modi, also decided to release 50 lakh tonnes of additional rice for distribution among the families below poverty line and those above this mark.

Briefing newsmen, law minister Ravi Shankar Prasad said the government was committed to controlling prices of essential commodities. Prasad hoped the states would take necessary steps to curb hoarding.

He said the cabinet panel discussed several other measures to stem price rise in various commodities, especially vegetables. As part of this drive, the government on Wednesday increased the minimum export price (MEP) for onions to $500 per tonne from $300 fixed earlier last month.

This is for the first time that stock holding limits have been fixed for vegetables to curb hoarding. Some traders were allegedly blocking supplies in anticipation of poor rainfall affecting the new crop. The specified ceiling will be in force for a year.

Imposing such limits, states can prohibit traders from stocking a commodity more than the prescribed ceiling. Traders found to be holding more than the limit can be fined or prosecuted.

Such stock limits currently exist for various food grains and cereals under the Essential Commodities Act, 1955.

Onion prices have been rising despite sufficient supplies mainly due to hoarding. Retail prices of onion have risen to Rs 25-30 a kg in the retail market while wholesale prices are ruling at Rs 18.50 in the national capital. At Lasalgoan in Maharashtra, Asia’s largest onion market, the wholesale price rose by about 80 per cent to Rs 18.50 a kg last month.

Raising of the MEP for onion is aimed at discouraging exports, which will no longer be a profitable proposition for traders. Earlier on June 26, the government had fixed the MEP for potato at $450 per tonne.

Further, the government has advised the states to delist fruits and vegetables from the Agriculture Produce Marketing Committee (APMC) Act, so that farmers have the option to sell their produce in the open market without going to the mandis, which are controlled by a few brokers.

Onion production is estimated to have risen to 192 lakh tonnes during the 2013-14 crop year from 168 lakh tonnes in 2012-13.

In the same period, exports have fallen to 13.58 lakh tonnes from 18.22 lakh tonnes. Domestic demand during the June-November lean period is met with stored rabi (winter) and fresh kharif (summer) produce.


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