Is ghee a ‘livestock product’? Here’s what the Supreme Court said

Who raised this question about livestock and ghee, and why?

On July 15, 1994, the government of (undivided) Andhra Pradesh issued a notification listing ghee as a livestock product for the purpose of regulating its purchase and sale in notified market areas after due compliance with the procedure laid down by The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966.

A group of producers of livestock challenged the notification saying that (i) ghee is not a “product of livestock” and it cannot, therefore, be regulated as notified and, (ii) the government had not followed the process for notification laid down under Section 3 of the 1966 Act. (‘Sangam Milk Producer Company Limited vs. the Agricultural Market Committee & Others’)

Section 3 prescribes that a draft notification be published and then objections be invited against it. Only after hearing these objections is the notification issued. On the other hand, section 4 entails the constitution of a market committee and the declaration of a notified market area.

How does the 1966 Andhra Pradesh Act define “livestock”?

Section 2(v) of the Act defines “livestock” as “cows, buffaloes, bullocks, bulls, goats, and sheep”, as well as “poultry, fish, and such other animals as may be declared by the Government by notification as livestock for the purposes of this Act”.

Section 2(xv) of the Act says that livestock products may be declared to be “products of livestock for the purposes of this Act” if the government issues a notification to that effect.

The Act sought to consolidate and amend laws regulating the purchase and sale of agricultural produce, livestock, and products of livestock, and to establish connected markets. It was a farmer-friendly law that aimed to secure effective prices for commodities by bringing producers and traders face-to-face and eliminating middlemen.

What did the High Court rule?

In 2009, a three-judge Bench of the AP HC ruled that “even though ghee is not directly obtained from milk (which is certainly a product of cow/ buffalo), it is certainly a product of a product of livestock i.e., cow or buffalo”. Thus, the court said, “It would be rather illogical or irrational to say that ghee is not a milk/ dairy product or to say that it is not a product of livestock.”

The “very clear” legislative intention behind Section 2 of the Act was that livestock products are not just those notified by the government, like butter and milk, but also “derivative items” like ghee, the court said. “We are convinced that the term ‘ghee’ has to be interpreted on the basis of expression ‘products of livestock’ as defined in Section 2(xv) of the Act,” it said.

The court also rejected the petitioner’s argument about procedure, holding that the 1994 notification had been issued not under Section 3, but under Section 4 of the Act.

And what did the Supreme Court say?

When the AP HC ruling was challenged, the top court had to decide whether (i) ghee was a “product of livestock” under the provisions of the 1966 Act and, (ii) the 1994 notification was in compliance with the procedure contemplated under the law.

On Tuesday (March 5), a Bench of Justices Sudhanshu Dhulia and SVN Bhatti upheld the 1994 notification empowering market committees to levy a fee on the sale and purchase of ghee. “The argument that ‘ghee’ is not a product of livestock is baseless and bereft of any logic. The contrary argument that ‘ghee’ is indeed a product of livestock is logically sound,” the court said.

“Livestock has been defined under Section 2(v) of the Act, where cows and buffalos are the livestock. Undisputedly, ‘ghee’ is a product of milk which is a product of the livestock,” the court said.

Relying on its 2001 ruling in ‘Park Leather Industry Ltd. v. State of UP’, the court said that all animal husbandry products fall within the meaning of ‘products of livestock’ as defined under Section 2(xv) of the Act.

In the 2001 case, the top court had dealt with the UP Krishi Utpadan Mandi Adhiniyam, 1964, which defined “agricultural produce” as including “animal husbandry products”, under which “hides and skins” was listed. The SC had to decide whether tanned leather would fall under “hides and skins”.

The court answered this question in the affirmative, saying that irrespective of its appearance, tanned leather remains leather, and would come under the definition of “hides and skins”.

“The same reasoning has been adopted by the Full Bench of Andhra Pradesh High Court that ‘Ghee’ is derived out of ‘milk’ by undergoing a process, yet it still remains a product of livestock, for the purposes of the Act and payment of market fee,” the court said.

The court also rejected the argument that the process under Section 3 wasn’t followed.