MSTC set to launch forward trading in niche horticulture products

MSTC says Sebi approval not needed in perishable commodity

The government owned mini-ratna MSTC Ltd is planning to launch forward trading in the horticulture products sector to support its recently launched nationwide electronic portal - eRaKAM.

The online trading platform which primarily deals in food grains, vegetables, fruits, spices and all agriculture related commodities and connected farmers directly with consumers, is all set to launch forward trading in pineapple and mango among a number of other such commodities to make the platform successful. Union Food Minister Ram Vilas Paswan, had last week said that around 2 million tonnes of pulses procured by the Food Corporation of India (FCI), would be auctioned on eRaKAM to begin with.

MSTC, however, does not feel the need to get regulatory approval for launching forward trading as it is proposing it in the horticulture commodities speciallly perishable commodities which are not traded in futures segment. Securities and Exchange Board of India (Sebi) had suspended such forward trading in January 2016.

"There is a normal practice in remote Indian villages to sell entire mango fruits for the season in an orchard at the time of flowering. This practice is prevalent since ages without any regulatory approval. If we are allowing mango / pineapple farmers to know their realisation at the time of flowering, farmers would be encouraged to take care of their fruits better. It is better, if farmers find buyers well ahead of harvesting of their products to reduce spoilage, as horticulture is a product with short shelf life. For cereals, however, forward contracts may not be needed due to their long shelf life. Meanwhile, MSTC is just a platform and not trading in any commodity," said B B Singh, chairman and managing director, MSTC.

Through its home grown technology, MSTC is engaged in the e-auctions of cereals, sandalwood, land parcels, teak wood and other such products on behalf of the state and central governments through its own e-portal.

It's newly launched electronic commodity trading platform eRaKAM, however, is dedicated to farmers in the Northeast who would be able to sell their commodities to the highest bidders across the country and fetch higher price.

"The target customers for eRaKAM portal are farmers, farm producer organisations (FPO), federation of farmer cooperatives, institutional agencies like Nafed, FCI, Apeda, mill owners etc on one hand and the traders, institutional buyers like Mother Dairy, Spencer, Metro etc in the other," Singh said.

The launch of eRaKAM has raised eyebrows as a similar government project — electronic National Agricultural Mandi (eNAM) — launched by the Small Farmers Agribusiness Consortium (SFAC) in April 2016, failed to attract adequate liquidity despite having connected with around 500 agricultural spot mandis across the country.

Meanwhile, moving in tandem with the electronic trade wave, India Farmers Fertiliser Cooperative (Iffco) has introduced Iffco Bazar, an online marketplace (online mandi) for farmers wherein they can buy and sell their products to farmers located anywhere across the country. Through this, Iffco aims to connect and bring on board all the 50 million IFFCO member farmers and the 36,000 cooperatives in the country on a single digital platform.

Existing private player in this business NCDEX eMarkets Ltd (NeML) has, however, gained handsome traction from traders especially in Karnataka where its parent National Commodity & Derivates Ltd (NCDEX) has modernised spot mandis.

"NeML markets have facilitated trades worth more than Rs 42,000 crore in FY 2016-17, a growth of more than 30 per cent as compared to last year. NeML has helped farmers' income grow by over 35 per cent. NeML's unique product - e-pledge - aimed to provide credit to small holder farmers (SHF), has facilitated credit worth more than Rs 1000 crore against the commodity deposited in NeML accredited warehouses and approved by the banks. We remain focused to help farmers to enhance their income leveraging our e-trading platforms. We would continue to focus on primary markets," said Rajesh Sinha, managing director and chief executive officer, NeML.