Comexes plan single platform for mandis

In order to bring in transparency in spot and futures trade, domestic commodity exchanges are planning to bring all 7,500 mandis on a single platform.

The move will benefit farmers and inform them about the prevailing prices.

The Multi Commodity Exchange (MCX) and National Commodity & Derivatives Exchange (NCDEX) are taking intiatives in this regard.

MCX has inaugurated a spot exchange - National Spot Exchange for Agricultural Produce (NSEAP) - with an investment of Rs 50 crore.

This first-of-its-kind spot trading platform is all set to start in six months. MCX has around five per cent equity of NSEAP and National Agricultural Cooperative Marketing Federation (Nafed) has spent Rs 50 lakh.

Remaining stake is owned by Financial Technologies. The State Bank of India (SBI) has been appointed as its nationwide clearing and settlement banker.

Last year, Union Agriculture Minister Sharad Pawar inaugurated the NSEAP in Pune.

In absence of a uniform trading system in the spot market, disparity between futures and spot prices is widening. The futures markets are gaining strength everyday while spot markets are weakening.

"Three components which help equity market are spot, futures and depository. In commodity market too, these three components are required for growth. At present, only futures have reached a certain level. Now, spot and depository have to grow to exploit the immense potential in the market," said Jignesh Shah, CEO and MD, MCX. NSEAP has already acquired around 100,000 sq feet in Mumbai.

The exchange has also ordered high-tech imported machines. Four state governments have approved the project while talks are on with another six states. About 600 APMCs have price monitoring links so far.

Futures are regulated by the Centre under FCRA Act while spots by the state government under APMC Act. Hence, before connecting mandis the exchange needs some approvals. The exchanges hope to get all the necessary approvals by year-end.

With the new system in existence, banks would come forward for agriculture loan due to online and autitable trade. Such transactions would remove middlemen and thus farmers would get direct benefits.