Under pressure from Kerala's food safety commissioner Biju Prabhakar
over the alleged adulteration of black pepper, the National Commodities
and Derivatives Exchange (NCDEX) – one of India's leading agricultural
bourses – stated that it does not have any liability regarding stocks of
the spice. The exchange added that it is not liable for non-compliance
by any member and market participant with all applicable laws on the
underlying commodity either.
“NCDEX merely provides a platform for trading in forward contracts, and does not own, deposit or deal with the goods in the warehouses,” the exchange, which has sought official permission to remove the mineral oil coating from the 900-tonne-stock, valued at approximately Rs 350 crore, said, adding that the removal of the adulterant by the holders of the stock and market participants would be in the best interests of the industry, as it would improve the quality of the spice.
The bourse – which is headquartered in Mumbai and promoted by a consortium of shareholders, including the National Stock Exchange of India (NSE), ICICI Bank, the Life Insurance Corporation of India (LIC) and the National Bank for Agricultural and Rural Development (NABARD) – stated that it has always ensured that the delivery of every commodity is in accordance with its contract specifications.
Seizures in Kerala
Prabhakar recently ordered the exchange to destroy the aforementioned stock of black pepper, and following seizures at six warehouses located in two districts of the southern state (Alappuzha and Ernakulam), those trading in the spice on the exchange made representations to the Forward Markets Commission (FMC) – the commodity market regulator – and the bourse, demanding that either valid goods be delivered to them or the value of the spice be reimbursed.
NCDEX confirmed that the pepper stocks were seized after buyers complained that they contained mineral oil, and added that the warehouses in Kerala were accredited by the Food Safety and Standards Authority of India (FSSAI), the country's apex food regulator. Since then, FSSAI has been testing the stock with the help of NCDEX and the Spices Board India, and ordered the destruction of 93 lots containing traces of mineral oil.
About 6,000 tonne black pepper was sealed. Prabhakar, who sealed the warehouses, issued a notice to the bourse, stating that it ensure that the spice does not enter the market. Spices Board India was entrusted with the task of examining the black pepper samples. Following the order, NCDEX claimed that the owners were urged to take up the matter with FSSAI and take appropriate action. The lots that meet the standards set by the regulator will be returned to their owners.
Most of the stocks in the godowns sealed by FSSAI were bought by the holders in off-market transactions outside the NCDEX platform. However, the bourse was informed by some industry players that farmers and traders engaged in the cultivation, production and trading of pepper adopt various methods to preserve the spice, including adding a small amount of mineral oil. This is later removed by steaming.
The adulterant
According to the Prevention of Food Adulteration (PFA) Act, 1954 [which preceded the Food Safety and Standards Act (FSSA), 2006], the use of any mineral oil in pepper is prohibited. The mineral oil used to adulterate black pepper is made of burnt diesel, paraffin oil, white petroleum and other petroleum products, which are neither digestible nor soluble. When black pepper is coated with this adulterant, it becomes unfit for human consumption and could even be carcinogenic.
Hearing in Indore
On September 17, 2013, the Indore Bench of the Madhya Pradesh High Court will hear a petition filed by the Kalimirch Vyapari Association, a body that represents traders who have incurred huge losses owing to the non-delivery of black pepper by the National Commodities and Derivatives Exchange. The members of the association have reportedly purchased the spice on the bourse by paying a sum of Rs 350 crore.
“NCDEX merely provides a platform for trading in forward contracts, and does not own, deposit or deal with the goods in the warehouses,” the exchange, which has sought official permission to remove the mineral oil coating from the 900-tonne-stock, valued at approximately Rs 350 crore, said, adding that the removal of the adulterant by the holders of the stock and market participants would be in the best interests of the industry, as it would improve the quality of the spice.
The bourse – which is headquartered in Mumbai and promoted by a consortium of shareholders, including the National Stock Exchange of India (NSE), ICICI Bank, the Life Insurance Corporation of India (LIC) and the National Bank for Agricultural and Rural Development (NABARD) – stated that it has always ensured that the delivery of every commodity is in accordance with its contract specifications.
Seizures in Kerala
Prabhakar recently ordered the exchange to destroy the aforementioned stock of black pepper, and following seizures at six warehouses located in two districts of the southern state (Alappuzha and Ernakulam), those trading in the spice on the exchange made representations to the Forward Markets Commission (FMC) – the commodity market regulator – and the bourse, demanding that either valid goods be delivered to them or the value of the spice be reimbursed.
NCDEX confirmed that the pepper stocks were seized after buyers complained that they contained mineral oil, and added that the warehouses in Kerala were accredited by the Food Safety and Standards Authority of India (FSSAI), the country's apex food regulator. Since then, FSSAI has been testing the stock with the help of NCDEX and the Spices Board India, and ordered the destruction of 93 lots containing traces of mineral oil.
About 6,000 tonne black pepper was sealed. Prabhakar, who sealed the warehouses, issued a notice to the bourse, stating that it ensure that the spice does not enter the market. Spices Board India was entrusted with the task of examining the black pepper samples. Following the order, NCDEX claimed that the owners were urged to take up the matter with FSSAI and take appropriate action. The lots that meet the standards set by the regulator will be returned to their owners.
Most of the stocks in the godowns sealed by FSSAI were bought by the holders in off-market transactions outside the NCDEX platform. However, the bourse was informed by some industry players that farmers and traders engaged in the cultivation, production and trading of pepper adopt various methods to preserve the spice, including adding a small amount of mineral oil. This is later removed by steaming.
The adulterant
According to the Prevention of Food Adulteration (PFA) Act, 1954 [which preceded the Food Safety and Standards Act (FSSA), 2006], the use of any mineral oil in pepper is prohibited. The mineral oil used to adulterate black pepper is made of burnt diesel, paraffin oil, white petroleum and other petroleum products, which are neither digestible nor soluble. When black pepper is coated with this adulterant, it becomes unfit for human consumption and could even be carcinogenic.
Hearing in Indore
On September 17, 2013, the Indore Bench of the Madhya Pradesh High Court will hear a petition filed by the Kalimirch Vyapari Association, a body that represents traders who have incurred huge losses owing to the non-delivery of black pepper by the National Commodities and Derivatives Exchange. The members of the association have reportedly purchased the spice on the bourse by paying a sum of Rs 350 crore.
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