For ensuring better price discovery by the farmers, the National Spot Exchange Ltd (NSEL) has already received license and signed memorandum of understandings (MOUs) with various states prior to its launch in August 2008.
NSEL, a physical commodities electronic exchange promoted by a consortium including the Financial Technologies India, has already received license to launch online trading facilities for various commodities from Maharashtra, Karnataka and Gujarat, which has State Agricultural Produce Marketing Committee (APMC) Acts. The Financial Technologies is also the promoter of the country’s biggest commodity bourses Multi Commodity Exchange.
Besides, NSEL will also launch contracts with delivery points at Bihar and Kerala, where the APMC Act is yet to be formulated.
The agricultural products, metals and industrial items will be launched for trading through NSEL, which would be deliverable at various locations across the country.
?Currently, we have initiated membership drive and we have around 200 ware- houses where the farmers can deliver their product,? Anjani Sinha, managing director and CEO of NSEL told FE.
Sinha said that the spot exchange would improve market efficiency by reducing the intermediate cost and would benefit the farmers. The mock trading in NSEL, which is expected to start in July, would give single day contract with a minimum 100 kgs of produce so that small farmers could also participate in it.
Through NSEL, the farmers would also have options of selling their produce after holding their produce for sometime so as to realise better price during lean season. ?The farmers can also avail loan during the intervening period against pledge of warehouse receipts,? Sinha said.
National Spot Exchange Ltd will also help farmers to find out right prices prevailing for their produce and thus facilitate small farmers to hedge their risk and discover the right prices for their commodities.