The curious case of stock limits on soyameal – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/economy/agri-business/the-curious-case-of-stock-limits-on-soyameal/article38031855.ece

Trading companies, traders, and private chaupals registered with the government can keep a maximum stock of 160 tonnes of soyameal

It was never meant to be an essential farm commodity that can have stock limits. And, even more surprisingly, stock limits during a year of ample production.

Soyabean processors are stunned and said the government should have acted to lower soyabean prices that would have automatically softened soyameal rates.

In two separate notifications, the Consumer Affairs Ministry, imposing the stocks limits, said this is prescribed till June 30, 2022 for all States and Union Territories. Millers and processors can stock equivalent to 90 days of their respective “daily input production capacity”.

The location of the storage should also be declared.

Further, the Ministry said trading companies, traders, and private chaupals registered with the government can keep a maximum stock of 160 tonnes with a defined and declared storage location.

“This is not the correct move as soyabean processors do not stock soyameal. They cannot afford to stock finished products incurring a huge cost. Soyameal is not an item for long storage even by traders. How this will help in controlling prices is not clear,” said DN Pathak, Executive Director of Indore-based Soybean Processors Association of India (SOPA).

The stock limit comes a month after SOPA wrote to the government seeking immediate imposition of stock limits on soyabean, and taking steps to curb undue and excessive speculation in soyabean futures.

“The stock limits were imposed when the crop was feared to be lower. This year, we have a higher production of soyabean, mustard and groundnut. But the government has imposed stock limits on soyameal surprisingly,” said BV Mehta, Executive Director, Solvent Extractors Association of India (SEA).

He pointed out that despite suspension of derivatives trading in the soyabean complex, including oil and meal, and crude palm oil, prices have risen this week.

Poultry sector cheerful

The government move, however, has been welcomed by the poultry industry. “This is a welcome move because traders had been hoarding soyameal. Poultry growers have been badly affected as the selling price of live chicken is ₹60 a kg, when the production cost is ₹90,” said Vangili Subramanian, president, Tamil Nadu Egg Poultry Farmers Marketing Society. “Now, all feed companies are covered under the Essential Commodities Act and they have to follow stock limit guidelines. Hope inspectors will not harass these companies,” said Vijay Sardana, a food policy expert.

Under the now-repealed EC (Amendment) Act, specific food commodities were subject to Stock Limit rules in case of emergency situations when their prices surge 100 per cent and 50 per cent in a certain period.

A trade analyst said the soyameal stock limit move was apparently aimed at stopping the processing of soyabean. “This will lead to a rise in bean stocks and ensure prices come down to reasonable levels.

The move is also seen as a step to prepare growers for moderation in the prices of soyabean in view of record projections of the crop in Brazil that will arrive after February.

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