Ncdex arm to procure grains for pvt parties

The National Collateral Management Services (NCMSL), a sister concern of the National Commodity & Derivatives Exchange (Ncdex), is in the process of entering the commercial foodgrains procurement services for private parties.

Currently, the NCMSL procures paddy only for the Food Corporation of India (FCI) at the prices fixed by the governments of Orissa, Madhya Pradesh and Bihar.

"Talks are in the preliminary stage with two parties for procuring paddy in huge quantity, but it would take time to fructify in affirmation," said A Hari Prasad, managing director and CEO of NCMSL, without revealing the names and quantity of the orders.

It would take hardly one week to put all the machinery in place to start procurement after finalising the process, Hari Prasad said, adding that the process may not show any positive result in this khariff season (October 2006-September 2007).

Terming the company as one of the only two non-traditional players (non-private players) engaged in minimum support price (MSP) procurement, Hari Prasad said the company is expanding its horizon silently, covering 34 districts this year from the 6 districts last year.

The MSP procurement is different from the commercial procurement, as the former offers no scope for negotiation, irrespective of the quantity of procurement, but the latter opens room for price negotiation with farmers and sellers too.

The NCMSL is, currently, responsible for procuring paddy from farmers and outsource milling to provide rice to the FCI at the MSP fixed by the governments concerned.

"Our clients are farmers and not the FCI. We ensure that farmers get the adequate price fixed by the government, thereby eliminating the middlemen," Hari Prasad said.

Meanwhile, the FCI has obtained the permission from the ministry of consumer affairs for the NCMSL to begin paddy procurement in West Bengal, but it is still awaiting the state government's approval. "For other states, we have no hesitation, if the FCI permits us," he added.

The company is also keen on entering the non-traditional states, including Uttar Pradesh and Jharkhand, where the FCI and the state machinery are not very active.

When quizzed about its possible entry into the traditional states, such as Punjab and Haryana, Hari Prasad said the FCI machinery is very strong there and as a common understanding the NCMSL does not want to enter the areas of common interest.

Last season, the NCMSL had procured 60 tonne of paddy. The company has managed to procure 1.2 lakh tonne of paddy so far this year without any target set for the entire season.

"No target works in our business. Hence, we do not set any target for paddy or wheat procurement. Out of our 450 existing centres, about 300 are open everyday which manage to go through strict quality and weight inspections. If the foodgrains adhere to the quality specification, then we start procurement," Hari Prasad said.

The NCMSL has obtained permission for wheat procurement also. Despite opening several centres, the agency has failed to procure any wheat last year owing to farmers not selling at the MSP.

As the NCMSL cannot offer anything other than the MSP, no farmer came forward to sell his stocks to the NCMSL, resulting in lower procurement by the FCI.

The NCMSL does not intend to enter any other foodgrains procurement because it sees innumerable opportunities in paddy and wheat procurement.