Spot comexes to fetch farmers better price

Spot commodity exchanges are set to turn around the country's agri trade. The exchanges will cut down the number of intermediaries and their benefits, thereby jacking up farmers' income by at least 25 per cent.

"With the start of online trade, the number of intermediaries is set to come down to 1-2 from the current 6-7. This will result in direct benefits to farmers in the form of better realisation," said Anjani Sinha, MD and CEO of MCX-promoted spot exchange, National Spot Exchange.

"In this process, farmers will have options "� to sell or not to sell, which is lacking in the existing marketing system currently," he added.

The online trade will enable farmers (as sellers) to discover better prices by analysing prevailing price levels, on tickers in mandis, and select time for sale while buyers (consumers or intermediaries) will discover prices through farmers' offer. "Even if farmers get 45-50 per cent of the prices consumers offer, the objective is fulfilled, as they now receive only 30-35 per cent of that," Sinha said.

At present, uncertainties are hanging over the fate of national spot comexes "� when will see the light of the day "� because of bureaucratic or administrative hurdles and, above all, a dire need to create participants' awareness. The Multi Commodity Exchange of India (MCX) and the National Commodity & Derivatives Exchanges (NCDEX) are planning to launch spot bourses, for which the two have obtained clearances from at least four-five states.

While NCDEX has already started a membership drive, MCX is silent on the issue and has diverted its attention towards creating awareness among possible stakeholders.

Both these exchanges were expecting to start trade on spot exchanges by the end of January. Without setting any timeframe for launching the spot trade, Sinha said the proposal was at a conceptual stage.

"We have started educating participants through various means. These include print and electronic media, visits to mandis and interaction with them in their own languages," Sinha said.

Facing huge difficulties in obtaining states' permission for the spot trade, NCDEX MD and CEO P H Ravi Kumar had earlier said, "We have learnt it from the delay on the part of the government, not to set a timeframe for launching the spot exchange."

NCDEX has been awaiting the amendment in the state Agriculture Produce Marketing Committee (APMC) Act for launching the spot exchange. "We are prepared with our system. When the state governments clear our proposal, we would start functioning," said Mukund S Annigeri, spot market head at NCDEX.

There are about 7,500 state APMCs in the country, of which hardly 25-30 per cent are connected through national highways. Commodity prices at various mandis are controlled by monopolised local traders who do not want a national connectivity, as they fear that they will lose their pie.

In spite of this scenario, national commodity exchanges' proposal to set up national spot exchanges for real price discovery is not being able to yield any results.