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| Uncertainty over regulator delays Warehousing Act |
| Dilip Kumar Jha / Mumbai Mar 03, 2009, 00:59 IST |
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The enactment of the Warehousing Development & Regulation Act (WDRA) scheduled for notification on March 1, 2009, is likely to be delayed 2-3 months because of uncertainty over appointment of the regulator.
The government, so far, has appointed Viswanath Chirravuri, resident commissioner of Andhra Pradesh Bhawan, as joint secretary of the Warehousing Development and Regulation Authority, the authority constituting the Act, under the Department of Food and Public Distribution (DFPD) to look at the regulatory aspects of the Act. The other members of the team are yet to be finalised.
The notification will make the warehouse receipts issued by credible agencies negotiable, enabling farmers to trade their commodities without carrying them physically. Experts believe this will save 25 per cent of the country’s agriculture output, which is otherwise lost due to poor handling during transportation.
“We are on the job to appoint the team even on deputation at least for one-two years to keep the Act in motion. When the team would start functioning, it would appoint its permanent members,” said Kuldip Kumar, food secretary, a division of the Ministry of Consumer Affairs, Food and Public Distribution.
When asked about the proposal of the Forward Markets Commission (FMC), the commodity derivatives market regulator, to appoint single regulator for all the three factors of commodities i.e. warehousing, futures and spot, Kumar said the proposal was impossible to honour.
“The process is very long and would take at least one year to pass through both houses of the Parliament, taking opinions of stakeholders among others,” Kumar added.
Meanwhile, Navin Prakash, joint secretary at the food ministry and currently in charge of the storage of commodities in government godowns and who also handled the regulatory aspect of WDRA till recently, said, “Notification enacting the Act cannot be issued unless a full-fledged regulator is appointed, which will take at least 2 - 3 months.”
Meanwhile, farmers are disappointed with the delay as this could lead to distress sale of farm produce to arhatiyas — the middlemen — would continue during the post-rabi season this year.
Generally, farmers sell their farm produce to middlemen at a price much lower than the prevailing market price during the harvest because of their inability to store goods in good condition, and pressure from lenders.
The middlemen store the commodity during the harvesting season and sell it during the lean season when price goes up, thereby, getting the full benefit of market movement. The Act is an effort to ameliorate the lot of farmers who can avoid distress sales of their farm produce by storing in accredited warehouses and selling it at an opportune time.
Unless the regulator is finalised, the Act cannot become a law, said Sanjay Kaul, MD and CEO of the National Collateral Management Services (NCMSL), a warehousing arm of the National Commodity & Derivatives Exchange .
The ministry is in an advanced stage of framing the guidelines for warehousing.
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