Because of a dramatic drop in prices, the government freed edible oil and oilseed distributors and large chain stores from stock limit orders on Tuesday. ‘The order will take effect immediately,’ the Ministry of Food and Consumer Affairs stated in a statement.
According to the announcement, the measure will allow wholesalers and large chain stores to preserve numerous sorts and brands of edible oils that they are unable to keep owing to stock control orders.
The exemption will also have a favourable impact on oilseed prices since it will increase procurement of oilseeds, enhancing the returns of domestic oilseeds-growing farmers, it added.
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In order to keep edible oil and oilseed costs in check, the government first placed stock limitations on retailers, wholesalers, and bulk consumers on October 8, 2021, with the stock limit quantity determined by the states.
Following that, the Centre imposed identical stock limitations, prolonging the directive until June 30 of this year. The order was extended to December 31, 2022.
The ministry evaluated the stock limitations in light of the current price situation of major edible oils, which is now experiencing a gradual reversal, and there is a significant drop in edible oil prices in both the foreign and local markets.
‘A need was felt for exempting big chain retailers and wholesalers from the stock control order as reports came in that wholesalers and big chain retail outlets were experiencing difficulties in their sales due to the control order as the limits specified for them were very low and replacement of shelf stocks in city limits is not possible on an everyday basis,’ it said.
According to the ministry, the stock restriction for wholesalers and large chain shops was based on the limits set in the 2008 stock limit, and it was a deliberate decision to keep the quantities lower. Furthermore, unlike today, massive chain retailers did not exist or play a significant role at the period.
The country’s stock limit order was established in response to rising edible oil prices in both the foreign and domestic markets. At the time, the extreme price fluctuation encouraged hoarding, profiteering, and black marketing.
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This prompt intervention by the government had resulted in a major drop in soaring prices and had helped to keep a lid on hoarding, particularly of soyabean seeds, it noted.
India has an edible oil shortfall of 55-60% of total consumption. In the fiscal years 2020–21, around 13.35 million tonnes of edible oil were imported.