Agri Business

Stock limit rule for CFA depots squeezing supplies: Trade body

Our Bureau Ahmedabad | Updated on April 09, 2020

SEA seeks exemption for manufacturers and CFA depots from stock limits

Facing supply disruptions of food commodities following imposition of Essential Commodities Act (ECA) in the wake of the nationwide lockdown, the edible oil processors have requested the government to exempt manufacturing units from the restiction.

The trade body raised the issue of clubbing clearing and forwarding agent (CFA) depots with wholesale or distributor depots, which is squeezing the supplies of essential commodities, especially edible oils. It said the restrictions may cause “adverse impact on end-consumers since the supply of edible oil will get greatly restricted and result in supply-chain inefficiencies.”

In a letter to the Union Home Secretary and other departments, the Solvent Extractors’ Association of India (SEA) on Thursday highlighted the practical challenges faced by the processors and their CFA following the imposition of the ECA, which mandates stocks limits on storage of essential commodities.

The State authorities treat these CFAs at part with wholesale dealers or distributors and impose stock limits on them with legal complications.

As per the established practice of the manufacturers, a production facility is located in a few States and consumption demands are met by maintaining multiple storage depots or clearing & forwarding hubs at different locations/States. These depots are either operated directly by the manufacturer or through their clearing & forwarding agents (CFAs).

“The CFA depot or hub is not a wholesale dealer nor a distributor but an extended arm of the manufacturer, and therefore, CFAs should be considered as manufacturer’s depots. The stock limits meant for wholesale dealers and distributors are likely to be misapplied to edible oil manufacturer’s depot operated CFAs.” Atul Chaturvedi, President, SEA said in the letter.

Plea for exemption

The SEA requested Centre that edible oil manufacturers and other manufacturers of essential goods, CFA depots and storage locations, owned or controlled by the manufacturers, be exempted from any stock limits that may be imposed under the ECA by the respective State governments.

Published on April 09, 2020

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