India's good old 'mandis' are all set to make way for swanky spot exchanges soon. In two months' time, winds of change will sweep across the country's agricultural sector with the launch of electronic spot exchanges.
As a result, an Indian farmer will, for the first time, have multiple options to sell his produce. He would no longer be dependent on Agriculture Produce Market Committees
India's largest commodity bourses -- the Multi Commodity Exchange and the National Commodity and Derivatives Exchange -- are poised to set up national-level spot markets in a couple of months.
"The Spot Exchange will provide a platform where farmers can sell at the best possible rate and the end users can buy at the most competitive price. National Spot Exchange will also provide services like quality certification, storage of goods and other customised value-added services.
"We hope that after the launch of the spot exchange, the canvass of commodity trading would be complete with India having both the spot and Futures market available on electronic platform with national reach," says Anjani Sinha, Managing Director and Chief Executive Officer of the MCX-promoted National Spot Exchange.
NCX is targeting Gujarat, Maharashtra and Rajasthan. Initial stages will see the launch of 10 centres in these states. NCX is a joint venture of Financial Technologies (India) Ltd, Multi Commodity Exchange and National Agricultural Cooperative Marketing Federation of India Limited. The biggest beneficiary of this new system will be farmers. Not only will it reduce the number of intermediaries between the farmer and end-consumer, it also strives to offer the best price to the farmer for his produce.
"Currently, only 25-30 per cent of the price paid by the consumer is actually realised by farmers. The rest of the proceeds get appropriated by a long chain of intermediaries. In the US, farmers' share is between 60 and 65 per cent," says Kalyan Chakarvarthy, country head (food and agribusiness), Yes Bank.
In the present system, APMCs serve as primary market between the farmers and traders. It basically serves the local traders in procuring produce from the farmers. Prices are dependent upon local demand and supply factors