NSEAP to sell stake to banks

National Spot Exchange for Agricultural Produce (NSEAP) has said it is open to equity-sharing with banks, State Bank of India (SBI) in particular.

Anjani Sinha, MD and CEO, NSEAP, said, "We will have equity-sharing arrangements with banks, mainly SBI, which is also one of the equity-holders in our parent organisation "� Multi Commodity Exchange."

He said the spot exchange (NSEAP) was about to finalise plans for its launch, scheduled for late January 2007, and the equity-sharing with banks would follow the move.

NSEAP plans to synergise its spot exchange activities with the rural credit programmes of public and private sector banks.

Sinha said the rural credit had been facing a number of hurdles, and the lack of assurance or guarantee at the farmer's end was seen as a stumbling block by most banks.

NSEAP plans to address the issue with an innovative and practical solution. It will issue receipts to farmers against the agriculture produce stored with the exchange and banks, in turn, will extend credit "� approximately 60-70 per cent of the total value of agriculture produce mentioned in the receipt given to the farmers.

This, according to Sinha, will not only solve the problem of much needed guarantee in the rural credit programme but also provide cushion of around 30 per cent to the banks in case there is any drop in the value of the produce.

According to Sinha, the spot exchange has discussed the arrangements with banks, which have, in turn, evinced interest in entering into the new type of credit arrangement.

HDFC Bank and SBI have already come forward to forge some kind of arrangement with the exchange. "The banks have agreed to depute their staff at our wearhouses for sort of a spot credit approval for the farmers," Sinha said.

The synergy, established by the exchange between rural credit and the spot market for agricultural produce, has prompted banks such as SBI to step forward and pick up equity in the exchange.

NSEAP planned to launch its membership drive from December 2006 and would open its door for trading in agro products formally from January 2007, he said.

For the warehousing arrangement, Sinha said the exchange strongly favoured regulatory authority in the country so that the stocks of some of the important agricultural produce could be monitored and any artificial rise in price checked. The exchange is awaiting clearance of the Warehousing Regulatory Bill 2006.

AgriFare 2006

The AgriFare-2006 today kicked off in Ahmedabad with the goal of making India 'the food factory of the world'.

However, the bigwigs of the agriculture and food-processing industry, along with the concerned government officials, hinted that the way to achieve the goal is tough and full of hurdles.

During the inaugural session of the two-day conference on agriculture and food processing, industry leaders like Rajesh Gandhi, MD of Vadilal Industries; Piruz Khambhatta, MD of Rasna industries; and Lamon Rutten, joint MD of MCX, spoke.

Khambhatta said India has the third-largest consuming class of the world and in four years it will match the entire population of Europe.

Gandhi stressed the need of a special focus on contract farming, more agro-parks and agro-terminals in the country.

RK Bansal, director, ministry of food processing industries, said, "Industry needs to have clearer specifications of standards of hygiene. We should lay down specifications in sugar, colours used in various food produces much like the norms and standards we have developed in water hygiene."