Cabinet amends Essential Commodities Act, approves ordinance to ease barrier-free trade

News: Cabinet has approved three separate ordinances to push agriculture marketing and commodities trade reforms in the country.


Amendments to Essential Commodities Act(1955):

  • Aim: To deregulate the commodities such as cereals, edible oils, oilseeds, pulses, onions and potatoes. 
    • Any limits under ECA over these commodities will be imposed only in exceptional circumstances such as war, famine, extraordinary price rise and natural calamity.
  • Significance: It will help to lessen the fears of private investors of excessive regulatory interference in their business operations and will attract private sector/foreign direct investment into the agriculture sector.

Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance,2020:

  • Aim: To open up agricultural marketing outside the notified Agricultural Produce Market Committee(APMC) for farmers and also remove barriers to inter-State trade.
  • Significance: It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices.It is also expected to pave the way for creating One India, One Agriculture Market in the country.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance,2020:

  • Aim: To facilitate contract farming where a private buyer contracts to purchase a crop at a certain price at the beginning of a season, transferring the risk of market unpredictability from the farmer to the corporate sponsor.
    • It also provides an effective dispute resolution mechanism with clear timelines for redressal.
  • Significance: It enables the farmer to access modern technology and better inputs. It will reduce the cost of marketing and improve income of farmers and will help in attracting private investment.