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A Memorandum of Understanding (MOU) was signed here today between Financial Technologies (India) Ltd. (FTIL), Multi Commodity Exchange (MCX) and National Agricultural Cooperative Marketing Federation (NAFED) with State Bank of India as the principal clearing and settlement Bank of Exchange, for the setting up of India’s first National Spot Exchange for Agricultural Produce (NSEAP). The MOU was signed in the presence of Shri Sharad Pawar, Minister of Agriculture, Consumer Affairs, Food and Public Distribution.
Speaking on the occasion Shri Pawar said that the introduction of national level electronic spot market facility for agricultural commodities marked a milestone in agricultural marketing in line with the emphasis given by the Prime Minister for setting up a national level common market for farmers with least market cost. The Government is building synergy with private players in the area of agricultural marketing mainly to provide adequate financing and the Model Agriculture Produce Marketing Cooperatives Act (APMC) was one of the steps in this direction, the Minister said.
The Government is also planning to introduce a legislation to make Warehouse Receipts a negotiable instrument in order to attract increased lending by banks for agriculture sector. Another revolutionary change being brought out simultaneously in the country was the introduction of Value Added Tax (VAT) regime to facilitate increased inter state trading and for the creation of a national market, the Minister said.
Underlining the need for reducing the number of intermediaries between farmers and consumers Shri Pawar said that major agro-business enterprises should procure directly from the production centres on very remunerative prices to farmers. However, electronic linkages have to be created between buyers and sellers for better efficiency in procurement along with necessary infrastructure support to settle transactions. The creation of Electronic National Spot Commodity Market is a step in the right direction, the Minister added and said that an important advantage of this market was that it would provide referral national spot prices on real time basis for the benefit of farmers.
National Spot Exchange for Agriculture Produce will link all the APMC’s by creating an electronic bridge between the consumers and producers across the country. NSEAP would enable the agro-based industries to procure agriculture produce more cost effectively and with complete assurance using the infrastructure support of the NSEAP. The participants from existing spot/physical markets can look at this platform to seek critical information on practically every commodity integrating the nation into a single commodity market place.
In his address, Shri L. Mansingh, Secretary, Department of Consumer Affairs emphasised the need for value addition and agro processing for agricultural products for improving the lot of farmers. The Government has removed restrictions in futures trading in various commodities and the integration of spot marketing with futures trading will open up a single commodity market place for the farmers. The creation of NSEAP would be a major step in ensuring the best price for the farmers for their produce and free them from the possible post-harvest distress sale, he said.
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