Union Cabinet approves farmer friendly Essential Commodities Act

On June 3, 2020, the Union Cabinet chaired by PM Modi has made historic amendments to Essential Commodities Act. Under the amendment, the regulatory environment has been liberalized for farmers.

The Farmers Agreement on Price Assurance and Farm Services Ordinance, 2020:

The amendment has been made through this ordinance. The ordinance will allow farmers to engage with aggregators, processors, exporters and large retailers as well. Under the amendment to Essential Commodities Act, 1955, the agricultural commodities such as pulses, cereals, onions oil seeds and potatoes have been deregulated.

Also, the amendment will allow clamping of stock limits only under very extreme circumstances. This includes famines and natural calamities. The stock limit is not applicable to processors and value chain participants. They shall stock only to their installed capacity. This will help in better price realization.

Background

The Finance Minister Nirmala Sitaraman had earlier announced under Atma Nirbhar Bharat Abhiyan that a central law would be formulated that will not bind farmers to sell their crops. The minister also announced that the law will not bind the farmers to sell their produce only to licensed traders in the Agricultural Produce Market Committee mandis.

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