NCDEX has requested Government authorities in the interest of Pepper industry in Kerala
NCDEX, the leading national commodity exchange, has requested Government authorities in the interest of Pepper industry in Kerala to consider allowing market participants to improve the quality of pepper stocks for compliance with food safety laws.
FSSAI had seized stocks of Pepper lying in six warehouses accredited NCDEX in December 2012. The stocks were seized in response to a complaint from one of the buyers that the Pepper contained mineral oil, which is not permitted under the FSSAI Act. Since then the FSSAI has been testing the goods with help from the Spices Board and the Exchange. The FSSAI has now issued an order for destruction of 93 lots found with mineral oil traces. Taking cognizance of the order, the respective owners have accordingly been informed to take up the matter with the FSSA and take appropriate action. Specific lots that have been found to meet the FSSA standards are to be released to the respective owners as per the order.
The Exchange has always ensured delivery of commodities in accordance with its contract specifications. NCDEX does not have any liability regarding these stocks. The Exchange is also not liable for non-compliance by any member and market participant with all applicable laws on the underlying commodity. In fact, most of the stocks in the godowns sealed by the FSSAI authorities were bought by the holders in off-market transactions outside the Exchange platform.
The Exchange only provides a trading platform for trading in forward contracts. It does not own, deposit or deal with the goods in the warehouses.
Industry players have informed the Exchange that farmers/traders engaged in cultivation, production and trading of Pepper adopt various methods to preserve Pepper, including by addition of small quantity of mineral oil as a fungicide. Traders routinely use a process of steaming to later remove the mineral oil coating.
Since the traces of mineral oil appear to reflect long-standing industry practice, the Exchange will seek Government intervention in the interests of industry and recommend that holders of the stock and the market participants should be given an opportunity to remove the mineral oil coating and improve quality.
Pepper is an important agricultural commodity, involving lakhs of farmers, traders, processors and exporters particularly in Kerala. It is hence paramount that while the food safety needs to be ensured, the economy of the state and the growers / traders are not affected adversely, more so when rectification of the commodity is possible by industry practice.
M/s Betul Oils Ltd. along with certain related entities (also one of the members of Kalimirchi Vyapari Association with regard to Pepper) was found engaged in certain irregular trading practices in violation of Exchange Circulars and FMC guidelines while dealing in Guar Gum and Guar Seed Contracts, for which, the Exchange issued Show Cause Notices (SCN).
The said M/s Betul Oils Ltd instead of responding to the SCNs challenged the authority of the Exchange and FMC to issue the SCN, by a Writ Petition (No.3621/2013) before the Hon’ble High Court of Madhya Pradesh at Indore which was dismissed. On appeal by Betul (appeal No. 582 of 2013), the Court directed them to respond to the SCN. Once again, Betul filed a review petition (No. 293 of 2013) which was also dismissed. Betul again filed an SLP (No. 19786-19787 of 2013) in Supreme Court against this order, where Supreme Court also while allowing withdrawal of petition at the request of Betul, directed Betul to respond to the SCN while granting them opportunity to approach appropriate Court if aggrieved by any order by the SCN issuing authority.
NCDEX, the leading national commodity exchange, has requested Government authorities in the interest of Pepper industry in Kerala to consider allowing market participants to improve the quality of pepper stocks for compliance with food safety laws.
FSSAI had seized stocks of Pepper lying in six warehouses accredited NCDEX in December 2012. The stocks were seized in response to a complaint from one of the buyers that the Pepper contained mineral oil, which is not permitted under the FSSAI Act. Since then the FSSAI has been testing the goods with help from the Spices Board and the Exchange. The FSSAI has now issued an order for destruction of 93 lots found with mineral oil traces. Taking cognizance of the order, the respective owners have accordingly been informed to take up the matter with the FSSA and take appropriate action. Specific lots that have been found to meet the FSSA standards are to be released to the respective owners as per the order.
The Exchange has always ensured delivery of commodities in accordance with its contract specifications. NCDEX does not have any liability regarding these stocks. The Exchange is also not liable for non-compliance by any member and market participant with all applicable laws on the underlying commodity. In fact, most of the stocks in the godowns sealed by the FSSAI authorities were bought by the holders in off-market transactions outside the Exchange platform.
The Exchange only provides a trading platform for trading in forward contracts. It does not own, deposit or deal with the goods in the warehouses.
Industry players have informed the Exchange that farmers/traders engaged in cultivation, production and trading of Pepper adopt various methods to preserve Pepper, including by addition of small quantity of mineral oil as a fungicide. Traders routinely use a process of steaming to later remove the mineral oil coating.
Since the traces of mineral oil appear to reflect long-standing industry practice, the Exchange will seek Government intervention in the interests of industry and recommend that holders of the stock and the market participants should be given an opportunity to remove the mineral oil coating and improve quality.
Pepper is an important agricultural commodity, involving lakhs of farmers, traders, processors and exporters particularly in Kerala. It is hence paramount that while the food safety needs to be ensured, the economy of the state and the growers / traders are not affected adversely, more so when rectification of the commodity is possible by industry practice.
M/s Betul Oils Ltd. along with certain related entities (also one of the members of Kalimirchi Vyapari Association with regard to Pepper) was found engaged in certain irregular trading practices in violation of Exchange Circulars and FMC guidelines while dealing in Guar Gum and Guar Seed Contracts, for which, the Exchange issued Show Cause Notices (SCN).
The said M/s Betul Oils Ltd instead of responding to the SCNs challenged the authority of the Exchange and FMC to issue the SCN, by a Writ Petition (No.3621/2013) before the Hon’ble High Court of Madhya Pradesh at Indore which was dismissed. On appeal by Betul (appeal No. 582 of 2013), the Court directed them to respond to the SCN. Once again, Betul filed a review petition (No. 293 of 2013) which was also dismissed. Betul again filed an SLP (No. 19786-19787 of 2013) in Supreme Court against this order, where Supreme Court also while allowing withdrawal of petition at the request of Betul, directed Betul to respond to the SCN while granting them opportunity to approach appropriate Court if aggrieved by any order by the SCN issuing authority.
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